Two weeks ago, flower and gift delivery business LVLY posted a number of job ads online. Within 24 hours, the business had received more than 900 responses.
The direct-to-consumer e-commerce startup, which was founded by Hannah Spilva and Verity Tuck in 2015, employs a team of seven across its locations in Melbourne, Sydney and Adelaide, along with a team of freelance florists and delivery drivers.
Thanks to that overwhelming response to its job ads for florists, warehouse staff and delivery drives, Spilva says the team has now doubled as the business rapidly scales to meet unprecedented demand for online gifts, and prepares for a key event in the floristry industry calendar: Mother’s Day.
“We are getting more and more on board every day in the run up to Mother’s Day,” Spilva tells SmartCompany.
“We will have upwards of 100 drivers across the Mother’s Day period, and upwards of 20 florists.
“It’s a pretty significant growth curve in a short period of time.”
While Spilva says from an operational point of view, the business was already gearing up for rapid growth, coronavirus business restrictions and isolation guidelines have brought forward those growth plans dramatically as sales have blossomed.
Spliva says LVLY’s sales have been growing at a rate of 100% year-on-year since the business launched five years ago. But since the stage-three coronavirus lockdown restrictions came into play, sales have been up by 320%.
At this end of the month, she expects sales to have increased four-fold, year-on-year.
Expanding the LVLY team has been an important part of meeting this demand, but with social distancing guidelines still in place, LVLY also found itself in need of more physical space too. To that end, the business has taken on an additional 300m2 of warehouse space in Melbourne and Sydney.
A gap in a changing market
Spilva and Tuck both worked in advertising before launching LVLY, and their work in digital strategy and brand-building helped them see a glaring gap in the online flower and gift-giving market for a new, disruptive brand.
The pair worked alongside each other as colleagues for five years, and Spilva recalls searching for affordable ways to send gifts to family and friends as a way of saying they were thinking of them.
“There wasn’t a company or brand currently fulfilling that need in the market,” she says.
The LVLY model is built on simplicity: customers can choose to send their loved one a LVLY ‘flower jar’ with fresh, locally sourced blooms, to be delivered that day in Melbourne, Sydney or Adelaide, or the following day in other Australian locations. While buyers don’t select the exact flower arrangements included in the jars, they can choose from a set of different sizes, and messages on the jars themselves.
And for those looking to give more than flowers, chocolate, skincare products and alcohol can all be added on. There’s also special occasion gift collections, and the ability to personalise the message on the flower jar you select.
The convenience of the model, and the swift delivery options, has put the business in a prime position to take advantage of a fast-changing retail environment, accelerated by the COVID-19 outbreak, says Spilva.
“In the current climate, nothing is certain,” says Spilva, adding that the business is not taking this upsurge in demand for granted.
But that being said, she believes there are longer term, structural changes in consumer behaviour that will “far outlast” the current pandemic-related restrictions.
“There’s an enormous shift of people moving to online purchases, and while we expect that to drop back to a certain degree, there’s been a fundamental shift in how people shop,” she says.
This shift benefits businesses such as LVLY in two ways, she says. Firstly, as a pure-play e-commerce business, LVLY is already set up to ride that wave. Secondly, isolation means people are “desperately seeking out ways to stay connected with loved ones”, and sending them a gift is one way to keep that connection going.
“Suddenly, they’re faced with not being able to attend birthdays, or give a hug to someone in need of one,” she adds.
It’s not to say dealing with this new demand is without its challenges. Logistics, and more importantly, avoiding customer delays, are a priority.
LVLY has a same-day delivery model in Melbourne, Sydney and Adelaide.
“We’re very fortunate that from a strategic perspective, we made the decision a long time ago to build our own delivery infrastructure,” says Spilva.
“Having our own fleet of drivers means we are able to fulfill our own destiny.”
It’s another story for deliveries outside of this area, however. Where the business could previously guarantee next-day delivery nationwide, Australia Post delays now mean they founders are looking at three-day delivery windows.
The challenge then is to ensure gift recipients are getting the freshest flowers possible, as quickly as possible, while also communicating with the gift givers and managing their expectations.
For their part, customers have been understanding, says Spilva, who notes there is a general awareness in the community of the logistical constraints currently facing businesses.
LVLY is also committed to donating all unsold flowers to aged care homes and hospitals to reduce the wastage in the business, and Spilva says it has been more challenging getting these posies to people who need them.
But that doesn’t mean doing away with the promise; rather, it means being “more tactical”, she says. Where the business was once able to deliver a collection of flower arrangements to a hospital ward for new mums, it now can leave those flowers outside the hospital for workers instead.
An industry in flux
The COVID-19 pandemic has laid bare vulnerabilities across all industries, and the floristry retail sector is no different, says Spilva.
“It will force every floristry company to re-evaluate the things we have probably taken for granted for years, and for some companies, decades,” she says.
It’s no longer the case that flower shops can rely on passing foot traffic and in-store purchases only.
“It reiterates the absolute importance of having an online infrastructure for your business,” she says.
“Right now, for floristry retailers, and any business across the world, having a digital component to your business is your lifeline”.
In the ‘flower world’, as Spilva describes it, there are a large number of high street operators that simply don’t have an online presence.
“Unfortunately, this will either force them to close their doors, or completely re-evaulate their distribution channels.”
This “forced innovation” could prove to be the success of these businesses, but it also completely changes the playing field, says Spilva.
At the same time, the coronavirus outbreak and associated travel restrictions has shown the value of having a truly local supply chain. According to Spilva, most Australian consumers don’t realise 40% of flowers sold in Australia are imported, and can spend up to 14 days in transit. The current global economic crisis is showing that is no longer a feasible business model, and it is now more expensive than ever to buy imported flowers.
LVLY’s goal is to source 100% of its flowers locally, and towards the end of last year, had achieved an 80% local supply chain. The business is committed to sourcing its other gift merchandise locally too.
Spilva says LVLY has been fortunate that its local growers and wholesalers have been able to fulfill its growing orders — in fact, she says, some of these wholesalers say LVLY’s orders are what is sustaining their own business — and she says buying local has now become about business survival.
“A local supply chain has always been a priority for us but it’s actually now critical to the survival of your business. It’s not just a altruistic notion about supporting local growers; you can’t rely on international imports anymore.”
So what comes next for a business that has rapidly scaled in a matter of weeks, but which faces the same uncertain industry forces as other Australian retailers?
“It’s about being smart with customer data, maintaining relationships, driving repeat sales, and holding on to the market share we’ve been able to take,” says Spilva.
And it’s about recognising that things won’t ever go back to how they were.
“One of the best outcomes of this is it has forced us to work in a completely different way,” says Spilva, when reflecting on having her team alternate weeks working from home.
“Whether customer demand is sustained or declined, every business has learned valuable things about how they work.
“Our business will never be the same again.”