1-800-Flowers.com Acquires Greatfood.com

Taking a page from the Amazon.com product expansion playbook, 1-800-FLOWERS.COM, Westbury, NY, the online and offline floral marketer on Tuesday announced its acquisition of online gourmet food purveyor Greatfood.com, Seattle, WA, for $18.5 million in cash, a move that allows the $296 million marketer to expand its offerings beyond the core product.

“Our broad strategy is to really be a complete provider of thoughtful gifts,” said Jerry Noonan, senior vice president/chief marketing officer at 1-800-Flowers.com. “Gourmet foods was already a category we came up with on our own and had already begun moving in that direction. The acquisition of Greatfood.com just accelerates that process.”

With the acquisition, 1-800-Flowers gains full access to a valuable network of more than 100 Greatfood.com vendors, including Blue Crab Bay Co., Sarabeth’s Kitchen, and The Ultimate Basket. And Greatfood.com clearly benefits from both the advantages and efficiencies of being part of a larger company. “They have an established customer base that uses them for their gifting needs, and the gourmet products we sell are perfect for gifting, so it’ll give us the opportunity to reach a much larger customer base,” said Ben Nourse, president, Greatfood.com.

1-800-Flowers.com made a name change, adding the dot-com extension, and went public earlier this year in its pitch to compete in the online world and expand its offerings beyond flowers and plants to gift baskets, candies, gourmet products, and gardening products.

GreatFood.com, which has an e-commerce site as well as a “netalog” (a print catalog that complements its online site: www.greatfood.com) introduced this fall, has a much smaller but loyal customer database. “They built a nice size business and a pretty good quality customer base,” said Noonan. Those customers will now be integrated with 1-800-Flowers more than 8 million customers.

For the balance of December, both companies will concentrate on the holiday 1999 peak selling weeks. Greatfood brand management will remain in place. Husband and wife team Ben and Donna Nourse will continue to hold their president and VP-merchandising titles, respectively, but will now report directly to Jerry Noonan. “We’ll concentrate on integration in first quarter next year,” said Noonan.

Although Noonan and Nourse said it was premature to predict what form the new entity would take, the Greatfood.com product base would certainly be integrated into the 1-800-Flowers.com site. “We plan to continue to operate Greatfood.com as a brand under the 1-800-Flowers umbrella,” said Mr. Nourse. “We’re expecting to maintain the personality [of Greatfoods.com].”

It is unclear whether the separate www.greatfood.com site and its companion netalog, Greatfood.com, would continue, but if earlier acquisitions are any indication, it will likely retain its brand identity. Plow & Hearth, Madison, VA, a home and garden catalog marketer acquired by 1-800-Flowers.com 18 months ago, continues to mail catalogs and sell products through its branded e-commerce site, as well as through a link on the 1-800-Flowers.com site. “We’re looking at a variety of ways to integrate the business,” said Mr. Nourse. “It’s premature to comment on which activities we will and will not continue.”

Separately, 1-800-Flowers.com also recently produced its first “netalog” to consumers which arrived in-home last week in time to capture holiday business. The catalog was produced in-house.

With an eye to future acquisitions and organic growth, 1-800-Flowers.com senior vice president Chris McCann, whose brother founded the company, will continue to look at companies in the “thoughtful gift expression space, he said. “We’ll be looking at ways to deepen our capabilities.”

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