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Will Gay Marriage Ruling provide an economic windfall to 1-800-FLOWERS.COM, Inc.? (Stock down 11.7% today)

Each week I trade insights with some of the most influential minds (CEOs, boards, shareholders, and leading journalists) in the e-commerce sector. Here are my thoughts after the earnings call. Find me @AbeGarver

I don’t believe shareholders are going to benefit much at all

In my opinion, it’s safe to assume that the Supreme Court Ruling making same-sex marriage a right nationwide will not provide an economic windfall to 1-800-FLOWERS.COM (NasdaqGS: FLWS) given the company’s announcement today that consolidated revenue growth in Fiscal 2016 will be in the 5%-7% range.

Here is why company’s Fiscal 2016 revenue guidance today was surprising

On the surface the guidance is surprising for two reasons:

(1) Last year FLWS was named to Internet Retailer’s 2015 Top 500 for fast growing e-commerce companies turning in 51.3% growth

(2) in an article last year, the Washington Post estimated that the (Supreme Court) decision could prove to be a $2.6 billion economic windfall for the wedding industry in the next three years when passed across the U.S.

1-800-FLOWERS is not a ‘Pure-play’ beneficiary of the Gay Marriage Ruling

Under the hood however, FLWS primary business (as a result of the Harry & David acquisition last year) is now Gourmet Food and Gift Baskets ($614.0M), followed by Consumer Floral ($422.2M), and Bloom Wire Services ($86.0M). In addition, we know occasions other than weddings (e.g. Mother’s Day, Valentine’s Day) contribute to the Consumer Floral and Bloom Wire Services. In other words FLWS is not a pure-play.

Here are two companies that could benefit however

If you are trying to profit from the Supreme Court’s gay marriage ruling, BlueNile.com (core business is the engagement category), and XO Group, Inc. (The Knot - the nation’s leading wedding resource) may be more attractive.

If you’re interested in more breaking news about the e-commerce sector including 1-800-FLOWERS, Blue Nile, or XO Group, please follow me on Twitter @AbeGarver

#abe garver #@abegarver #Moving the e-Markets #$flws #1-800-flowers #Blue Nile #$NILE #xo group #$XOXO #The Knot #gay marriage ruling #Internet Retailer #valentine's day #Mother's day #ecommerce #same-sex marriage

Here is what Overstock.com’s President acknowledged on last week’s earnings call

Each week I trade insights with some of the most influential minds (CEOs, boards, shareholders, and leading journalists) in the e-commerce sector. Here is the most important quote of the week in my opinion, and reaction from my network of industry insiders.

Recently I predicted that changes to FedEx and UPS’ pricing models (dimensional weight) would crush profits

@abegarver makes a big call that new January 2015 DIM pricing will crush e-commerce profits. tweeted by Tae Kim firstadopter

Here is what Overstock.com's President acknowledged on last week’s earnings call:

Stormy Simon, President Overstock.com

I mean of course we are always concerned with the shipping pricing. But I think what gives me peace of mind is that it affects everyone is our space. It’s not just going after Overstock.com, it’s something everyone has to be aware of and address. (Q1 2015 Earnings Call)

Dr. Patrick Byrne: Founder, CEO Overstock.com

And this is really going to be a function. Who wins that game is a function, who has the most granular data about their expense down to the SKU level, because then you can price in where you have more expenses.

Reaction from industry insider Eric McCollom, President, Red Stag Fulfillment

I listened to the audio broadcast and the recurring theme certainly is ‘granularity’. They didn't really go into detail about how they were going to use that granular detail to improve their costs, and that's really the key. He did mention understanding SKU-level costs for the purpose of understanding the true cost to buy, manage, ship a product. This autopsy data is useful in understanding profitability of a SKU, but that really has limited value if that's all it's used for.

RSF has a shipping invoicing module that records the shipping costs of each package (and its contents) for every order. While the seller wants transparency of costs for each order/shipment, the value we bring is understanding total system costs for everyone involved, including the carriers.

What has allowed RSF to be so successful in rate negotiations is finding as many win-wins as possible with the carrier. Looking for opportunities to align efforts to reduce total system costs for everyone will be the way to keep driving better discounts (not strong-arming the carriers).

This is almost never talked about in wider circles. Having data is one thing, turning it into useful information is another. The carriers want strategic partners just like anyone else and they reward those that look for ways to help them lower their costs as well. That's how we approach our relationships with our carriers, and it pays much better in the long-term. We will have the data and so will our clients. What we offer is a team that knows how to use that data to our clients' benefit.

Reaction from Jon Barker, CEO, Hayneedle.com (everything home)

While most larger cube shippers will likely see a significant increase in their net freight, the dim weight changes had immaterial impact to our freight costs. For several years our experienced supply chain team has been working with our carriers to optimize costs based on product characteristics. Where there is impact, we fully understand it at the SKU level, and can make adjustments in real-time to the benefit of our customers.

Reaction from industry insider Mike Connors, CEO, Bulbs.com

Bulbs.com enjoys a productive 2-way partnership with our carrier, FedEx and we understand that in order to advance the efficiencies of their service to us that we must work to pack our bulbs, fixtures and ballasts as effectively as possible. We are finding that our added attention to dimensional weights is forcing us into better packaging decisions that translate into an improved user experience for our customers. At the same time we are helping FedEx to maximize the capacity utilization of the trucks in their ground network - that's how a win-win partnership works.

Reaction from Mark Carson, President and co-Founder, Fat Brain Toys

The new DIM pricing will obviously affect some companies more than others. Some of it is product driven, but the other big driver is operational efficiency. Companies that offer free shipping, but end up sending multiple shipments to fulfill a single order are going to feel the impact much more than those companies that are engineered around a 'ship complete' model.

Reaction from industry insider, Mike Cachat, CEO, Jenson USA

The industry standard is free shipping and with ever increasing shipping costs by the carriers we must figure out how to bridge the gap. JensonUSA.com is looking at several options right now including A/B testing several complex delivery models to increase freight income while reducing costs but eventually I see the need for us expand our distribution model to include a warehouse on the east coast to reduce zones. Freight had always been a big part of our success and the ever changing landscape is nothing new.

Reaction from industry insider, David Auerbach, President, Kellyco Metal Detectors (world’s oldest and largest)

Dimensional pricing resulted in one of our hottest products -the Garrett Ace 250 - shipping as an 15-pound package, over five times its actual 2.7-pound weight. Moving to FBA (Fulfillment by Amazon) was not a good fit, but RSF is. If you want our hottest product, we figured out a way to do it for a $5 flat rate.

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