Ecuadorian roses are considered the best in the world due to their incomparable quality and beauty, and unique characteristics: thick long stems, big buds and vivid colors. Also, the biggest difference of the Ecuadorian rose is its long life in the vase after being cut. They don’t need to be stored in a cold warehouse, which makes them strong and resistant against handling.
There are also preserved flowers. The fresh cut flowers have been dehydrated and preserved with a chemical solution and then oven-dried. They may be used in boutonnieres, corsages, wreaths, formal and informal displays, and similar ornamental articles. Preserved flowers, known in the industry as “everlasting flowers” or “everlastings,” are not as perishable as fresh cut flowers.
The flowers will be commercialized in the United States. Painfully, the Ecuadorian government decided to withdraw from negotiations to extent the ATPDEA treaty last year and duties as high as 6.8% are now levied on all floral products since August 1, 2013. As a consequence the product may face problems in the market regarding pricing.
The product has affected the local economy in a negative way. Due to the cheap price of the product, the major competition for local farmers is located in South America. The target market will be flower shops in our target cities. We’ll be targeting residential areas, which have a high-income population.
Competition & Buying Patterns
Our main competitors will be other local businesses that import from: Holland, Colombia (holds a FTA agreement with the US) and Kenya.
Five holidays account for 95% of all purchases of fresh flowers in the US: Valentine’s Day 36%, Mother’s Day 27,4%, Christmas/Hanukkah 15,1%, Easter/Passover 8,9% and Thanksgiving Day 7,4%.
• Our initial investment would be around $ 1 million , to cover our cost for the first two years. Our capital structure would be % 60 debt and % 40 equity. Hence we plan to get a bank loan for $ 600 and each of the 6 owners would contribute $ 66.6 K. The leasing of storage facility would cost around $ 30 K for 5000 square foot of space each month. Employees salaries, utilities and transportation costs are the main expenses to be considered.
• The main cost is transportations, is 10-20% higher than importing from Colombia. Average for one kl is 0.43 cents.
• Average per sq foot for storage facilities in New Jersey is $5.37.
• Our company will process payments and receivables via notes payable, cash transactions, electronic payment.
Capital Structure Overview
Bank Loan 600.000 Storage 30.000
Equity 400.000 Functioning Cost 70.000
TOTAL 1.000.000 TOTAL 100.000
Sales Strategy & Marketing
As wholesalers, our customers will be local flower shops. We’ll prepare a DVD training program for flower shops to make best arrangements with our products. Every 3 moths we’ll print a booklet to flower shops that will release creative flower arrangements.
We’ll start with the most crowded 10 cities of US. And every 3 months, we’ll add 10 more cities so at the end of 2014 we’ll be in 30 cities across USA. At 2015, after we establish in 30 major cities, we will start an online selling website. First 10 target cities:
1 New York
2 Los Angeles
7 San Antonio
8 San Diego
10 San Jose
We’ll contact and take service from Wholesale Florist and Florist Supplier Association (http://www.wffsa.org/ ) to find best colleagues.
We already signed 5 contracts with leading Ecuadorian flower suppliers. We’ll start with 5 suppliers however we’ll be evaluating their performances, quality of the products, delivery timings.
Our initial suppliers are:
Shipping and Distribution The Products
• Shipping Contract: Between our 5 supplier in Ecuador and our company. Our suppliers will be shipping the products according to our agreement.
• Sales Contract: Buying from suppliers and selling to our customers.
• Distribution Contract: % 10 discount from FEDEX to our deliveries.
Implementation Schedule & Evaluation Plan
Target Date For Marketplace: 1 May
Deadlines & Milestones & Evaluation:
– Flower shop research and agreements: 31 March
– Product orders, shipping and delivery arrangements, legal documentation and marketing materials (training DVD’s and special booklets for Mother’s Day Flower Arrangements): 30 April
– Monitor sales and wholesaler performances for the first month: 31 May.
– Alter products or wholesaler companies depending on the sales performances: 30 June
– Planning of the other term – wholesaler research and agreements for the next 10 cities: 31 July