At a recent forum at the Gordon Institute of Business Science (GIBS) the NetFlorist’s Story was relayed by Ryan Bacher, MD and co-founder of NetFlorist. He also explained how they went from being ignorant about all things flowers (except for roses) to being the leading online florist retailer in South Africa.
Here is the YouTube video of Ryan Bacher’s speech on how NetFlorist began:
Nowadays, starting an e-commerce company is difficult – there is a reluctance to compete with established and successful websites, said Bacher.
However, Bacher said any online business would have to resolve a challenge for their customers in order to become successful:
“If you can create a niche and solve a problem using online in South Africa, you will fly.” – Ryan Bacher
That is just what they did, they created a niche and solved a problem.
NeTFLORIST’S STORY AND GROWTH
NetFlorist was launched in 1999 as a test case for an e-commerce company in South Africa, when online retail was still in the early stages of development. Bacher said they knew nothing about flowers and here there was very little initial focus on fulfilment, strategy, industry, market research, and marketing, HR, technology or the product.
The team built a basic website, with very little data and relied heavily on e-mail markerting, which was still a novel form of communication at the time. Only when the site generated R30 000 in turnover in its first month, slightly more than an average established florist would make, did the team realise there was a market for the business.
TRANSITION TO RETAILER
NetFlorist had to change their mindset in order to transition from e-commerce company to retailer. View this video to learn how Bacher and team managed to get it right:
As NetFlorist matured, the company made the important transition from internet start-up to retailer, and had to consequently learn key retailing theories such as margin and mark up: “Retail is about the product that you sell. The technology is not all that important.”
The business expanded from 11 to 150 employees in 2007 as it brought its suppliers, drivers and florists in-house. “Selling the product online is only one part of the journey. The logistics of delivery are difficult and you can very easily become over reliant on suppliers,” Bacher said. Today almost all successful e-commerce retailers in South Africa have their own warehouses to control distribution.
The company now sources 70% of its flowers in South Africa and the other 30% from the rest of Africa.
THE WAY FORWARD – EXPLOIT OR EXPLORE
As NetFlorist’s story unrolled and the business expanded, we had to reach a decision as whether to continue to exploit its current revenue streams or explore new ones, Bacher explained.
“As there is very little customer loyalty online, the only differentiator in our industry is product and service. We have to innovate,” he said.
Since expanding our offering into gifting, confectionary and bakery products and sameday personalisation of gifts, 60% of sales are from flowers and 40% from non-flowers, with an average order amount of R400.
Future product extensions include an exploratory foray into fresh fruit and vegetables delivered to homes and international deliveries with local offerings set to launch in Singapore, Malaysia and India.
“We have to do things that are slightly different and difficult to copy as a way to build a moat around the business, or we will immediately attract imitators,” Bacher said. “The key is to focus on the core, while at the same time be good at exploring new things.”
A few photos of then and now:
Today, Bacher is known as the ‘Grandfather of the internet’ in South Africa for his innovation and for leading the way with e-commerce. It will be interesting to see what the future holds for NetFlorist!