Aussie start-up Floraly has unveiled a new Christmas offering as it tries to push into the corporate gifting space: live Christmas trees that are delivered through regular courier services.
Launched just this year, Floraly was established in a bid to reduce the amount of wastage in the floristry industry.
“We had kind of done a lot of looking into the flower industry and realised how wasteful it is,” co-founder Alec Ramsey told My Business.
“The stats that I’ve been reading from overseas... are that about one-third of flowers that are destined for florists end up going to waste.”
He said the start-up’s business model is based on similar ones operating overseas, whereby orders are received online as the first step before any stock is purchased, enabling a more direct channel between growers and customers.
Packaging is done in the company’s Sydney warehouse, by its team of four permanent employees, bolstered by casuals for seasonal requirements.
“For us, it’s not possible to actually order flowers for same-day delivery, and that’s a choice we made when deciding between wastage and freshness, and convenience,” Mr Ramsey said.
Living Christmas tree gift boxes
The start-up has since opted to employ the same model to living Christmas trees, as part of a push to expand beyond the customer market into corporate gifting.
Trees are packaged as a complete gift set, including a 60cm tree with its full rootball and soil, lights and decorations as well as a gift card. All of the trees are sourced from a grower in Victoria.
“They all come from a little farm called Coolwyn, so all locally grown and they ship them up to us here,” Mr Ramsey said.
He confessed that the idea is not entirely new, and is based on a similar offering discovered in the UK. But he felt that it could also work in Australia, and could be used as a means of it expanding into the corporate gifting space.
“At the moment, it’s about 90 per cent [of our business] is direct to consumer. The business relationships is something we’re just starting to roll out now,” the founder said.
“What we really want to do on the corporate business side of things is not just get into the kind of office flowers, that sit there and look fantastic, but we really want to get into providing a unique way for businesses to reward their customers and retain them.”
Of course, small trees with their intact root systems and soil structure are considerably weightier than flower bouquets, which presented the fledgling business with dilemma around shipping costs.
According to Mr Ramsey, he and fellow co-founder Stefan Muff combined their projections based from initial operations with the sales figures from a separate business — Churchill Gowns — they also operate together in order to negotiate more favourable shipping fees.
“Shipping in general is a huge cost of ours,” he said.
“Basically, the short of it is that we’ve got some really good logistics partnerships, so we do the majority of our deliveries in partnership with StarTrack, and we’ve just been able to essentially negotiate really great rates.
“I knew it had to be affordable, and it was just a case of being able to negotiate with them to make sure we can get [affordable rates] and we were able to promise them some good volumes, assure them that we’ve got a lot of growth ahead of us and get some good rates to get us started.”
Asked how a fledgling start-up can go into such price negotiations with a large commercial partner, Mr Ramsey said it amounted to “calling on precedents”.
“A big part of it for us was being able to call on precedents from our own experience, and also from these other similar companies that have operated in the [United] States and also the UK,” he explained.
“We were able to go to StarTrack and say, ‘This is a business model that has shown really great potential overseas; we see the exact same potential here’, and so being able to kind of reference that proven track record elsewhere and say this is not just an idea that we’re pulling out thin air and we’re hoping is going to work well, but here is a great example of the kind of growth we can expect based on what’s happened overseas.
“And also being able to... look at something we’ve done successfully before in other businesses, helps to reassure them that this is going to be a success.”
For start-ups or other business owners without previous examples to showcase, Mr Ramsey repeated that demonstrating similar examples of other businesses in various countries or territories is still a valuable negotiating tool.
“I think as a general advice, if I was going to give to somebody, I would say find a precedent,” he said.
“If you want to start a good negotiation and you don’t [have] much to show for this specific business, find examples of other businesses that are like yours that you can draw on and say, ‘I expect that my company is going to go well because of X, Y and Z, and this is what someone else has achieved and I can see the exact opportunity in this space’.”
Mr Ramsey added, referring to his own negotiations: “They were willing to kind of extend this to us on a not permanent but temporary basis; they basically said ‘Great, these are the rates we’ll give you, let’s reassess them in six months’ time, and if you’re not hitting them, then we’ll have to renegotiate them back again.’ But as it is, I think we’ll be fine hitting those numbers.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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