Mercury, the Roman god of speed and commerce with winged feet (and an icon for megaflorist FTD), comes bearing flowers. FTD Group is the holding company for operating subsidiaries FTD.COM and FTD, Inc., established in 1910 as the Florists' Telegraph Delivery Association by a group of 15 florists. Besides flowers, the company offers plants, gourmet foods, and gift baskets to a variety of customers, including consumers, retailers, and more than 40,000 florist shops in the US, Canada, and the UK and under the brand Interflora in Ireland. FTD was spun off into a publicly traded company in 2013; it owns online floral and gift company Provide Commerce.
Change in Company Type
United Online acquired FTD in a deal valued at about $441 million. In return, FTD shareholders received about 15% of United Online, the operator of the NetZero and Juno ISPs.
Because FTD comprises the bulk of United Online's revenue and represents its more promising operations, the parent company in November 2013 spun off FTD, including the domestic and international operations of the company, while continuing to run its communications and content and media segments as a separate company. As part of the move, United Online will explore strategic alternatives for its non-FTD segments and cash in on its portfolio of patents and patent applications.
Product revenue for FTD comes from selling floral, gift, and related items to consumers through its web sites and by phone, as well as through its floral network members. Its services revenue is generated from membership fees, order-related fees and services, and subscription and other fees generated from independent members of both the FTD and Interflora floral networks.
Based in Downers Grove, Illinois, FTD serves consumers across the US, Canada, the UK, and Ireland through its floral network members, web sites, and by phone.
Sales and Marketing
The company's primary focus is on generating orders from new and existing customers, marketing its services to its floral network members while enlisting new members, and marketing its services to alternative channels the likes of supermarkets and mass merchants.
For its consumer business, FTD uses online advertising (search engine marketing and optimization, social media, social gaming, and group-buying programs), co-marketing and affiliate partnerships, loyalty programs with airlines, credit card companies and hotel chains, database marketing via email promotions, direct mail and other print advertising, email-based reminder services with personalized reminders, and radio and TV advertising.
FTD's marketing efforts for its floral network include conducting member appreciation and training events, sponsoring and participating in floral and retail industry trade shows, and rolling out offline media campaigns. The company boasts a dedicated sales force to market its products and services to floral network members and encourage non-member floral retailers to join the network.
Worth noting, because orders placed through FTD's consumer websites or telephone numbers are paid for using a credit, debit, or payment card or PayPal, consumers typically pay for floral and gift orders before FTD pays the floral network members and third-party providers to fulfill and deliver them. Its floral network members are billed monthly for products and services and for net clearinghouse order activity.
In 2014 FTD spent $69.5 million on advertising and promotion.
FTD's revenues rose in 2014, as it has for the last five years. It hit $640 million, a 2% increase over the previous year, based on 10% higher sales in the International segment. Net income has fluctuated over the years and it rose 83% to $22.8 million.
Looking to diversify, the flower industry heavyweight acquired the flowers and gifts businesses of Provide Commerce from owner Liberty Interactive for $430 million in stock and cash in late 2014. The deal included ProFlowers, Shari's Berries, and Personal Creations, but did not cover RedEnvelope. FTD expects to wring out $25 million in annual cost savings from the deal over the next three years by cutting purchasing and distribution costs for the combined operation. Liberty Interactive will own a 35% stake in the combined company, which will be run by FTD's current management team.
While the US and UK markets are highly fragmented with thousands of floral industry participants, FTD has noted some key market trends that are steering its strategic focus. A growing percentage of orders are placed through floral mass marketers rather than with traditional retail florists. Consumers purchase "cash and carry" bouquets from supermarkets and mass merchants as opposed to traditional florists, which have grown to rely more on floral network services to make up for this lost business and for orders through the Internet. In response, traditional retail florists -- and their fellow mass marketers -- have expanded their product selection to include gift items.
Soon after United Online's acquisition of FTD, the company oversaw FTD.com's face-lift, which included updating the online florist's branding, marketing, packaging, and websites. Initiatives also included a partnership with funeral service provider Batesville Casket Company to provide customized, co-branded floral websites to its funeral homes in the US and Canada.