Porter's Five Forces - 1800flowers

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Category: Business and Industry

Date Submitted: 09/14/2011 09:31 PM

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For over 30 years, 1-800-Flowers has been providing customers with fresh flowers as well as a selection of plants, gift baskets, gourmet foods, confections and stuffed animals. Recently, 1-800-Flowers has been expanding and making efforts to diversify with it’s fairly recent acquirements of new brands that offer products such as home décor, children’s gifts, weather related gifts and specialty treats. From this diversification and expansion into other types of gifts, 1-800-Flowers has seen tremendous growth. In 2007, their revenue increased by 17% from what it was in 2005 and 2006. Along with their diversification, 1-800-Flowers has also put money and efforts into increasing the efficiency of their company and managed to decrease their operating expenses, further boosting their revenue. In addition to their monetary growth, 1-800-Flowers has also seen a significant growth in its customer base. Between 2006-2007, 1-800-Flowers was able to attract over 3.5 new customers to their already 25+ million-customer base. As a whole, 1-800-Flowers seems to be doing very well as of recently. They attribute their growth and success mainly to their new product offerings, operational expense reductions and the relationships that they build with their existing customers.

1-800-Flowers definitely has made it harder for potential floral and gift enthusiasts to enter the market. There are several barriers to entry. Since 1-800-Flowers has been around for over 30 years, they’ve established a vast network of connections and resources that allow for them to prepare and deliver your gift for you practically anywhere in the country in a timely fashion (think next day delivery). Companies that are looking to get started in the business don’t have the necessary resources or connections established to practice such economies of scale and offer their product to people all across the country.

As far as I can tell, the prices charged by 1-800-Flowers have remained pretty consistent over the...