Why Valentine’s Day shipping delays are this CEO’s “biggest fear”
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U.S. consumers are expected to spend $21.8 billion celebrating Valentine’s Day this year, according to an annual survey by the National Retail Federation. That averages out to about $165 per person, down $32 from a year ago.
For those in the flower business, it’s one of the most important days of the year. Ahead of the holiday, “Marketplace” host Kai Ryssdal talked with Christina Stembel, founder and CEO of the online flower delivery company Farmgirl Flowers, about how changes in consumer spending habits have affected her company and how she’s planning for a post-pandemic world. The following is an edited transcript of their conversation.
Kai Ryssdal: We had you on in September. You’d gotten through what was supposed to be a slow summer. How did 2020 end for Farmgirl Flowers?
Christina Stembel: 2020 ended phenomenally — I can’t believe I’m saying that — with 100% growth year over year.
Ryssdal: Sorry, 100% growth year on year?
Stembel: Yeah, 100% growth. It’s 40% higher than we were anticipating for the year. I can’t believe we did that through COVID, so I’m really happy with how it ended.
Ryssdal: I wonder how much of that is people are buying stuff that is flowers instead of like services and travel and all that good stuff?
Stembel: Yeah, I think a lot of it. I mean, we definitely benefited. And I feel really bad saying that when so many companies did not. But we benefited from just already being set up as an e-commerce company and, you know, it was a big year for gifting, because people couldn’t be close to the ones that they loved, so they sent flowers and gifts instead. We definitely benefited from that, but you know, I’m still definitely hoping to get the vaccines in people’s hands sooner, even if it means a negative impact for our company.
Ryssdal: Of course. Can we talk logistics for a second? Because you had had to jump through no small number of hoops to get your product out to market in the middle of a pandemic. You got sick, I mean, it was a whole big thing. Has that calmed down a little bit? You’ve put in protocols, I’m sure?
Stembel: Yes, absolutely. I mean, we’re still spending a lot of money making sure we keep our team safely employed.
Ryssdal: Like how much money?
Stembel: Over $100,000 a month, keeping our team safe.
Stembel: Yeah, it’s a lot. We do biweekly testing. During the holidays, we did weekly testing. We’re doing deep cleaning still. But [we’re adding] one more thing, it’s a device, a technical device, that tracks people, who they’re in contact with, so that way, when somebody tests positive, we can isolate it and get everybody quarantined that was around them.
Ryssdal: Did you get whacked at all by the whole shipping mess around Christmas? Because, I mean, you know, I had regular Amazon packages that were late and it was fine if it was, you know, a light for my bike, but if it’s cut flowers, I imagine that’s a whole different deal.
Stembel: Oh, my goodness, we got hit so bad. And it’s my biggest fear for Valentine’s Day, going into Valentine’s Day right now. You know, we’ve had days when 100% of our packages weren’t delivered. And we have to take financial responsibility for that. So going into Valentine’s Day, when that potentially can be $12 million of flowers aren’t delivered on time that we would have to reship at our expense. And so, it’s my biggest fear. It’s what keeps me up at night. There’s just a lot of it that’s out of our control completely.
Ryssdal: Yeah. So all of that’s keeping you up at night. I wonder how much brain space you have to plan for your post-pandemic business? Because at some point, this is going to be over, and you’re going to be back to running an e-commerce business with perishable goods in a regular economy. Where are you on that?
Stembel: Yeah, I’m a little nervous. I think like a lot of companies, too, we’re realizing that much of our team can work remotely, and just like, I think, everybody else in the state of California, we’re looking at, like, why are we here then? The tax policies and all the things that are being implemented in California are really hard, especially when you have wage-level team members and very low-margin business. So, you know, we’re looking at like, do we even stay in the state? You know, this year, we’re looking at, hopefully hitting $100 million in revenue, and so we’re no longer going to be a small business. And so we really need to think about those things.
Ryssdal: Did you imagine when you started this thing that you’d be looking at being a $100 million-a-year business?
Stembel: I mean, I never had any idea that I could do that bootstrapped. To be quite honest, I thought we would have to raise capital, and I’m just — I’m a little proud, I have to admit.
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