This month we analyze Colvin, a company that I have followed since its foundation. First as a consumer, attracted by its value proposition, and then from a professional point of view, due to its disruptive business model. We will focus mainly on its growth strategies.

Colvin has recently been going through a rough patch: it has failed to meet growth expectations, which has made it difficult to raise capital (after years of highly successful rounds) and this has led to internal restructuring, such as layoffs and the replacement of the founders as CEOs.

One learns from difficulties, and I admire Colvin’s courage in trying to change the rules of a sector as traditional as flowers. That’s why I think it’s worth analyzing their initial proposal and the strategic decisions that have led to the current situation.

Let’s get started!

Starting point: a disruptive business model

The founders of Colvin —Sergi Bastardas, Andrés Cester and Marc Olmedillo— started out selling roses on Sant Jordi’s Day with no other intention than to earn some extra money, with up to 300 stalls in Barcelona. This improvised MVP allowed them to identify three key market problems:

1. High prices.
2. Low quality and durability of the flowers.
3. Lack of product and brand differentiation.

The high prices and the low quality and durability of the flowers were the result of a supply chain created 100 years ago and not optimized at all. They could go through 6-8 intermediaries and all purchases were centralized in Holland (65% of all the world’s flowers still physically pass through this country today). The founders’ idea was to break this chain and try to buy directly from the producer and include technology to optimize the processes.

The lack of differentiation was mainly due to the fact that it was a very fragmented sector, with many small neighborhood florists and not much design.

With all this learning, Colvin launched at the end of 2016 with the vision of revolutionizing the traditional flower sector, a global market worth more than $30 billion a year.

Colvin proposed a business model that solved these problems through two strategies:

1. Breaking the traditional supply chain, eliminating intermediaries and optimizing processes with technology.
   • Lower prices: by eliminating intermediaries (going from 6-8 in the traditional chain to working directly with the producer) many commissions were eliminated and waste was avoided, so the producer could be paid better and a better price could be offered to the final consumer.
   • Higher quality: shortening the supply chain also shortened the delivery time for the flowers. With the previous model, the flowers could take two weeks from the time they were cut until they reached the end consumer, but with the model proposed by Colvin, the flowers took a maximum of 3 days. This guarantees a fresher and much more durable product.
2. Taking care of the brand and the customer experience. The sector was fragmented, made up of many neighborhood florists, with few branding or communication initiatives. Colvin set itself apart by taking care of every point of contact with the consumer: product design, attractive photos, web usability, special packaging for shipments, and exceptional customer service.

Business evolution: growth highly leveraged by the financing strategy

The model approach was successful, boosting turnover and enabling the company to attract significant funding:

Two years after its launch, it had already raised a total of 9 million since its creation in various rounds. With this funding, they began their international expansion in Europe. A year and a half later, in June 2020, the company obtained an additional 14 million euros to consolidate its presence in the European market.

That year, 2020, was a year of record growth for the brand: Colvin recorded a turnover of 15 million euros, more than tripling its income compared to the previous year. This growth was driven by COVID, which was the great catalyst for online sales and made people spend more time at home and want to have a more pleasant environment.

With this growth in the figures, in July 2021, Colvin secured 45 million euros in a round of funding aimed at boosting its expansion in Europe (they were already operating in Portugal, Italy and Germany).

However, the growth driven by COVID did not last. Although in 2021 they achieved revenues of 19.1 million (42% more than in 2020), they did not meet the expectations of their investors. This led to a drop in valuation, the dismissal of 80 employees and the need to request an additional 6 million to guarantee liquidity.

Analysis of growth strategies: “Jack of all trades, master of none”

With so many financial resources at their disposal, it seems that Colvin wanted to pursue every opportunity that came their way. They wanted to take on too many opportunities, too quickly.

Let’s analyze these strategies according to our Growth Strategy Map methodology. For each one, I will give my opinion on whether or not I consider it to have been the right decision.

Evolution of the “WHAT”: Two key expansions in their range of products

2019: Launch of Colvin Jungle, their line of indoor plants.

The company started out selling and sending bouquets of flowers but, seeing the growing trend in the indoor plant market, they decided to seize this opportunity.

• I believe this strategic decision was a good one, as they leveraged their established brand, supply model and marketing efforts to reach a similar audience. This allowed them to increase consumption occasions and, consequently, the frequency and average purchase ticket. The timing of the launch was particularly favorable, as the arrival of the pandemic in 2020 boosted demand for plants to decorate and enhance home spaces.
• However, the creation of the Colvin Jungle sub-brand seems unnecessary, as it added more management complexity than clarity or differentiation for the consumer.

2022: They expand their offer to non-plant gifts (chocolates, dolls, champagne).

After detecting that 80% of the purchases on their platform were for gifts, they decided to expand their catalog beyond the plant world, incorporating dolls, books, chocolates and champagne.

• Questionable decision: they diversified too soon, without yet consolidating their flower and plant sales proposition. They could have opted for one-off collaborations with other brands to create special packs as a marketing activity to reach new customers. This would have allowed them to reach new potential customers without deviating from their main value proposition.

Evolution of the “WHERE”: New channels and international expansion

Physical stores: In 2019 they opened their first store in Barcelona, but closed it in 2020 due to the pandemic.

• This decision was premature; they had not consolidated their online proposition before expanding physically.

International expansion: In less than five years they were operating in Italy, Germany, Portugal and France.

• Although internationalization was a logical strategy, I believe they may have executed it too quickly. A more gradual approach, prioritizing learning by market, would have been more sustainable.

Evolution of the “WHO”: New wholesale business line

Wholesale business (B2B): They sold raw materials to other florists, taking advantage of their purchasing power.

• This strategy diluted their focus and increased operational complexity without yet consolidating their core business (B2C).

Evolution of “WHEN”: Seasonalization

To combat seasonality, Colvin worked on the design and variety of bouquets (new proposals every two weeks) and on the launch of plants.

• These strategies were successful in increasing customer recurrence and value, as well as working to strengthen the value proposition and the initial business model.

Conclusion: key learnings

The Colvin case highlights the importance of balancing growth with prudent strategic management and constant adaptation to market dynamics.

In terms of business strategy, the key lesson is that even if there is a clear opportunity, it does not mean that we should take advantage of it.

There are very consolidated businesses where the main task of strategic work is to look for and generate new opportunities. I experienced this during my time at P&G working in categories as mature as laundry or dishwashing detergents.

On the other hand, new businesses or disruptive proposals encounter numerous growth opportunities. Here, the important thing about strategic work is to choose which ones to pursue. The key is knowing how to focus: analyzing well and, applying Pareto’s law, selecting the opportunities that will generate the greatest growth and synergies. Choosing what not to do is as strategic as choosing what to do.

Because even if there are the financial resources to pursue all the opportunities that arise, what will be lacking is the management capacity of the management team and the organization to execute them with the necessary energy. At Noxis, our mantra in these cases is Michael Porter’s quote, “The essence of strategy is choosing what not to do.”

I sincerely hope that Colvin, a company and brand that I admire, knows how to make the right strategic decisions to generate sustained growth and continue to bring disruption to the market of flowers and plants that beautify our daily lives.

Sources

1. Official website:
   • Colvin: Official site
2. Initial business model and evolution:
   • Campo Galego: Colvin, the start-up that revolutionized the flower world by eliminating middlemen
   • Qonto: Colvin: the revolution of ecommerce in flowers
   • Crónica Global: Colvin, the flower start-up that went from being handmade to millions in funding
   • Marketing4eCommerce: Colvin: innovation in the business model behind its floral revolution
   • Entrepreneurs: Colvin: how one of the most traditional sectors, flower sales, survives the storms
3. Cut flower market report:
   • Global Market Insights, Cut Flower Market Report
4. Information on Colvin’s funding rounds:
   • TechCrunch: Colvin closes €45M Series C funding led by Eurazeo to expand in Europe
   • EU-Startups: Colvin secures €14 million to become the Amazon of flowers
5. Financial data and business evolution:
   • Cinco Días: Colvin reduces staff after fall in valuation and liquidity problems
   • La Vanguardia: Colvin faces restructuring to ensure the sustainability of its business
   • 20 Minutos:
     • Colvin negotiates a restructuring plan with creditors and shareholders
     • Colvin suffers a valuation cut and works on replacing the co-founders
   • El Periódico: Flores online: Colvin weathering the storm
   • Expansión: Colvin suffers a valuation cut and lays off employees
   • The New Barcelona Post: Colvin continues its international expansion in France
   • El Referente: Colvin acquires Bloovery, a digital wholesaler of flowers and plants
6. Interviews with the founders and industry analysis:
   • Startups’ Oasis: How Colvin is transforming the floral industry from the ground up
7. Collaboration in research and editing:
   • Artificial intelligence tool: ChatGPT, developed by OpenAI, for text revision and editing and to complete the sources section.