Arena Flowers’ Valentine’s display wins hearts, not profits

Arena Flowers’ Valentine’s display
wins hearts, not profits
James Hurley, Daily Telegraph, 14 February 2012
[…]
[For Arena Flowers, Valentine’s Day] is an opportunity to win new
customers and provide evidence that Arena Flowers has the systems in
place of a much larger business. The company made around £2m in
the past week. Its projection for this year as a whole is £8m.
[Will Wynne, co-founder of Arena Flowers, says] ‘We’ve got to build
a business with a £50m turnover run rate in a week. For the rest of the
year, you’re running a relaxed small business. It’s weird.’
Wynne and his team have spent the past three days preparing 45,000
orders for dispatch, when an average day would be closer to 500. An
extra warehouse and 180 temporary staff were hired, split between the
company’s Dutch production facility and ‘fulfilment’ of orders in
London. […]
He is hoping the manic period will provide useful discipline for when
Arena Flowers, which runs websites in six European countries,
becomes a permanently bigger business. To get there, it cannot simply
[rely] on using internet marketing to win sales during the ‘bun fight’
around Valentine’s Day and Mother’s Day, he says.
‘We’ve got a very competitive market. I want the business to be here
in five years’ time and it won’t be if we’re only focused on ranking in
Google.’
To that end, the company has just won a deal with American flower
retailer Provide Commerce to run its European distribution service.
It also runs flower deliveries for a web-based greetings card business,
a deal which provides 40pc of Arena Flowers’ revenues.
Arrangements like those, and the manic Valentine’s Day period, are
possible to manage because of the 18 months the company has spent
building a control system that Wynne’s staff have given an obscene
name to because of its complexity.
‘We’ve now got screens showing live updates of orders coming in,
where they are in the fulfilment process, how production’s going: realtime,
supply-chain updates.
‘Ours is a low-margin business with loads of little pieces that you need
to get right. If you don’t, you end up with big losses instead of small
profits,’ he says. If Wynne is hungry for a blueprint Arena Flowers can
follow, he need only look at his American partner. Provide Commerce
36
Reading 5: The external environment of a business
was started as an e-commerce flower business in 1998 by entrepreneur
Jared Polis.
It was purchased for $477m (£302m) by John C Malone’s giant
Liberty Media in 2006, the year Wynne and [co-founder Steve] France
started Arena Flowers. When Wynne visited Provide Commerce’s San
Diego headquarters last year, he asked them how they had managed to
grow so quickly. Their response was an underwhelming steer to ‘focus
on product’. Then Wynne happened to look at the company’s potted
history chart on the office wall and spotted the $35m the company had
raised from venture capitalists. ‘They said, “oh yeah, that as well”’.
[…]
Wynne, who worked at eBay before starting Arena Flowers, is trying
to raise a rather more modest £1.5m to spend on new staff, technology
and products, the latter being necessary to separate the company from
the crowd, he says.

Answer the following questions based on the extract above:
1 How does Arena Flowers differ from a traditional florist’s shop?
2 What are the main uses of information technology by Arena Flowers?
3 What does information technology enable Arena Flowers to do that it
would not otherwise be able to do?

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