Calyx and corolla

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University of Toronto *

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Business

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Feb 20, 2024

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Name : Ayan Date : 20/10/2022 Case : Calyx and corolla Case Type : Evaluation Introduction Calyx and Corolla started by finding a gap in the market. People wanted flowers, but a $5 bouquet would be upsold for as much as $40 after going from farmer to wholesaler to retailer. This made it unreasonably expensive. Through creating good relations with delivery companies and farmers, even though calyx and corolla were paying more than normal, they were still up with 80% margins. Through cutting sales channels, they were able to get to the customer their flowers for far lower prices at relatively high margins. This is therefore an evaluation case. It is further proven by the word “reassessing” “Stimulated by their success in introducing a new distribution channel for flowers, Owades and her two key associates, Fran Wilson and Ann Lee, were reassessing the firm's long-term growth strategy.” Reassessing is another way of saying “evaluating” and in short, Calyx and Corolla are simply evaluating their long-term strategy with the following criteria, “Was Calyx & Corolla more a mail-order operation or should it compete directly against more traditional outlets, such as retail florists, and wire services, such as Florists Telegraph Delivery (FTD)? How fast did it have to grow to protect its initial success? What would be the financial implications of various growth strategies? How should its personal objectives and those of its investors and employees influence the character and pace of growth?” Analysis SWOT

Strength (INTERNAL) Weakness (INTERNAL) 1. Strong relationships with suppliers 2. A strong relationship with delivery companies 3. First mover advantage 4. High margins 1. High reliance on FedEx 2. Customers can’t see and smell the flowers beforehand 3. No customization - Most florists allow customers to customize bouquets Opportunity (EXTERNAL) Threats (EXTERNAL) 1. Expand into Europe - international markets 2. The increasing popularity of other shopping methods 1. Supermarket, local vendors 2. Seasonality could affect both demand and supply Listed above is an outline for the SWOT analysis. Through this analysis, we will be discussing their strengths, weaknesses, opportunities and threats. As seen within the table, Calyx and corolla have a strong set of strengths from fantastic relationships with their suppliers to fantastic relationships with their delivery companies. This, therefore, allows them to get orders out faster and receive products that are of better quality than competitors. Furthermore, Calyx and corolla have a unique set of distribution channels, which in turn allowed them to gain significant market share. Whilst there are strong strengths, there are major weaknesses. For example, Calyx and corolla have a heavy reliance on FedEx and occasionally UPS. Heavy reliance on a singular company for delivery may result in delays should systems be down and extended delivery times should the delivery company be

undergoing internal problems. Apart from the method of delivery, the method of business means that customers are unable to see or smell the flowers they order until they arrive. Even with a 100% satisfaction guarantee, new customers may be skeptical about ordering from Calyx and corolla. Apart from this, Calyx and corolla do not allow for customizations. These two aspects tied together are what make flower shops and buying flowers a unique sensory experience. However, with the lack of this, Calyx and corolla open themselves up to some major weaknesses. As with any business, Calyx and corolla have available external opportunities and threats that they may choose to address. For starters, as they offer delivery, they could counter a lot of their weaknesses by offering other methods to shop for flowers by perhaps opening a retail store. Speaking of retail stores, local vendors and supermarkets are major threats to Calyx and corolla and its business largely due to similar pricing and increased convenience. Furthermore, seasonality is another relatively uncontrollable threat Calyx and corolla have to face. With the changing seasons, supply and demand alternate. For example, there may be fewer flowers in the winter, or higher demand on mothers day and Valentine’s. Apart from the threat of volatile supply demand, Calyx and corolla may be able to expand into international markets, particularly places in Europe wherein shopping for flowers is more of a cultural norm as was seen by the higher spending on flowers at $60 compared to the US’s $36 avg order value annually per capita.

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STP Segmentation Calyx and corolla’s demographics include retail shoppers and corporate clients largely within the United states. The flowers are generally used for gifts on occasions and seasons or as room decor/home decor. Targeting They largely target corporate and individual retail buyers Positioning Map

Place Promotion 1. Call to order 1. Mailing lists 2. Catalogs 3. Promotional tie-ins with brands Product Price 1. Fresh flowers 2. Bouquets 3. Roses 1. Competitive pricing due to fewer channels of distribution 2. Lower shipping fees and speed due to a good relationship with FedEx Calyx and corolla sells high quality flowers through a unique distribution method that aims to get rid of retail stores. They are a call to order business that advertises through catalogs, mailing list and promotional tie-ins with brands, for example, their tie-in with bloomingdales. They are competitive on their pricing due to being able to skip out on multiple middle men and by maintaining good relations with suppliers and delivery companies, particularly FedEx and UPS. Conclusion and Recommendation Through the analysis above, we can tell that Calyx & Corolla is a relatively successful mail order business, however, it severely lacks on the experience flower boutiques and in-person retailers provide. Due to its hands free nature, customers are unable to look at the flowers, smell them, or even customize them So Whilst I would say Calyx & Corolla is a business that competes with mail orders, should they be able to implement more classic ways of shopping, by for example, sending samples, I

would say they could compete more with traditional outlets such as retail florists, wire services, and Florists Telegraph Delivery (FTD). Due to being the first of its kind, Calyx & Corolla had to move fast. Whilst Calyx & Corolla was not profitable until 1991, they almost doubled their marketing budget every year (in thousands of dollars) 1,223 to 4,466 between 1988 to 1990 and as much as 7,021 by 1991. It had to go this fast so as to protect its initial success and gain the maximum amount of market share before copy cats flooded the market (due to the ease of replication and minimal start up costs). Whilst they did grow exponentially, their spending was relatively simmialr. As a result they have to report losses on a regular basis which is the implication of their chosen growth strategy. Each business has its own personal objectives and without exception, so does Calyx & Corolla. However, just like any business, these objectives are highly influenced investors and employees which in turn reflect the character and growth of this florist mail order business. Keeping everything in account, my recommendation for Calyx & Corolla would be to continue what it is doing, however, decrease its reliance on a single shipping platform, and expand into more profitable markets, like the european one, so as to increase margins and profitability and find new, more cost effective and high return methods of advertising and marketing.

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OVERVIEW Large mail order business Lots of investors Rapid growth High marketing costs Possibility to expand into european markets High quality - Low price Stiff competition from local vendors and super markets Not a profitable business at the moment

Calyx and corolla

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