Hello. I'm Will and with my team of flowery whizzkids I run web florist, Arena Flowers. With Valentine's and Mother's days looming I’m working like a man possessed readying everything for the coming storm.
However I'm here to talk about what I've been squeezing into the other hours of the day; our new website AmazeBox.co.uk, which has just gone into public beta. The site offers personalised, occasion-led gift boxes (incorporating fresh flowers) from £9.99 including delivery.
Commoditised race to the bottom? We’re out
If you look at our competitors, a lot of them now offer flowers for £9.99, delivered in a postal box that doesn’t fit through your door (delivery costs account for around £3.60 of the £9.99). This trend started after the credit crunch, first with a £19.99 product, then £14.99 and eventually £9.99.
What you get for £9.99 is basically a box with a twig in it; a terrible customer experience. We refuse to do that on Arena as we feel it would cannibalise sales and destroy our reputation for quality. However, the tactic undoubtedly hoovers up orders so we have been looking for a response to it for some time.
Is there an elegant way to address <£10 price point with fresh flowers?
We think there is. We looked at the lessons that could be learned from other low value ecommerce operations, such as LoveFilm, Graze and Moonpig, and worked them into our own unique idea for our sector. A key point is that if you qualify for 'Large Letter' status (and thus fit through standard letter boxes) you can drive the cost of delivery down to less than a pound. The trick was finding a flower that would fit in a small box when in bud, but then open up to give a delightful experience when in the vase. Without that, the gift box would not work.
I can assure you we were all very nervous when receiving our first transit tests!
Another key lesson we took from the above companies was to seel to make the box an intrinsic part of the experience, not just an incidental element. Graze’s boxes are very distinctive and Moonpig’s cards need no introduction. We have tried to make our boxes equally striking and are sending them out in clear shrink-wrap so that neither you nor anyone that sees the wrapped AmazeBox will miss it (hence the strapline 'What’s in yours?').
Ring fenced development to avoid distraction in the core business
It’s no small undertaking to launch a new website let alone a new brand. A lot of time and resource are required. There is a strong argument that we should stick to what we’re good at (running a beautiful website and being the best flower delivery company in the UK, ahem) and focus our efforts on the forthcoming peak period. I happen to agree with that, so we funded the new venture separately and ring fenced the resources to build it. This means that the project has barely interfered with the core business which, given the 100% growth we are seeing this Valentine’s, is good news.
We also capped our max number of AmazeBox orders for the period. No sense getting greedy and then launching catastrophically.
Challenges of setting up
Naming: It’s been a while since we started Arena and I’d forgotten how much work it is building a new site from scratch. Even finding a name that was available was stupidly hard; we ended up building a script that checked 7,000 different word combinations, eventually settling on AmazeBox (even though the .com wasn’t available). We’re happy with where we got to (eventually).
Marketing: The low price is good for volume but means that traditional marketing methods (eg PPC) are likely to be expensive, unless the conversion rate of the site is very high, something we can’t rely on, and selecting the keywords to target is not obvious. However, the product’s percentage margins are quite high so we can be quite generous with sharing and discounted boxes.
Graze are superb at recruiting customers to promote their own low priced boxes and we took their implementation and built a similar system which will not only incentivise the customer to generate referrals but which will also recruit the recipient to generate referrals (something we’ve never seen anyone else do).
Cannibalisation: It would be a shame to drive customers away from higher priced Arena to lower priced Amaze. So we will be cross promoting it quite carefully, with the aim of the offers being seen as complementary and not competitive. A bit of a conundrum that one.
Presentation: If you do the maths on all the different possible combinations of boxes, cards, gifts and flowers it comes to several million. The challenge then is how to present this bewildering range of choices in a usable way. We chose to adapt the 'survey' approach, asking a couple of questions and then building a recommended gift box for the recipient. The survey approach is a neat way of getting a customer into a buying flow for a complex product without totally bamboozling them on the way.
We’ve done a lot of hard work on this; how do we stop people nabbing the idea?
The final thought was a defensive one. We think this is a pretty good idea and could sell a lot of units; I can attest that it’s a delightful experience to have one land on your doormat - and I was expecting mine. But what’s to stop our competition copying it when they (hopefully) see the success of it? Nothing. Obviously, it’s conceivable that we will create and monopolise the market for this product before anyone has a chance to respond. However that may well be wishful thinking; marketing money talks and our competition has lots.
We sought advice from a patent lawyer who felt that there was a sufficiently 'inventive step' to apply for a patent and we filed a fast track application last February. I’m happy to report that our patent will be granted on the 6th February this year. We also protected some of the designs (pending) and the technology behind our referral scheme (pending). I’m under no illusions that these will stop people trying to copy the idea if it is a big success. The real benefit is that if someone does try to copy us, they will have to do it in a suboptimal way as the best way of doing this idea is, we believe, the way we’ve patented it.
Naturally, having proprietary IP is also handy for valuations and of course it can result in licensing revenue from home and abroad. We live in hope!
Right, now please excuse me; I must get back to my day job – shifting some Valentine’s Day flowers!
Find out more about Amazebox