1-800-Flowers Brightens Recession With Gift Baskets, Technology

Thirty-three years ago, 1-800-Flowers revolutionized the flower delivery business by offering a central point of contact for nationwide flower delivery. Previously, consumers had to visit local flower merchants, although they could arrange for flowers to be delivered across the country via FTD, a network of florists established a hundred years ago.

Today, less than 20 percent of orders come in via telephone. In an effort to capitalize on the sales potential of the Internet, 1-800-Flowers reinvented itself as 1-800-Flowers.com.

The flower delivery industry is largely driven by a few holidays -- primarily Mother's Day and Valentine's Day. So 1-800-Flowers.com is reinventing itself again. This time, the company is spinning off a new brand, 1-800-Baskets.com, in an effort to diversify its business into the lucrative $16 billion gift basket industry.

While 1-800-Flowers.com has offered gift baskets in the past, the company has now redesigned its website to brand 1-800-Baskets.com as a separate entity, and it is launching ads that highlight non-floral offerings. Rather than focus on holidays, future promotional campaigns will encourage gift giving for all occasions.

1-800-Flowers.com has also jumped on the interactive bandwagon. The company created a Facebook application for people to send "mystery gifts" to friends, a website called "YourDancingChocolate.com," for customers to create customized videos about chocolate gifts, and even an iPhone application.

The primary reason for this diversification, of course, is a desire to broaden the company's business model. 1-800-Flowers.com had its first ever revenue decline in 2009 and wants to insulate itself from future economic downturns.