Partnerships / Acquisitions

1-800-Flowers Buys Bed Bath & Beyond's Personalization Mall

Bed Bath & Beyond

Bed Bath & Beyond needs cash. 1-800-Flowers needs to find new growth. Today (Feb. 18) they met over a Bed Bath & Beyond property called Personalization Mall, 1-800 paid $252 million and both parties achieved at least a portion of their priorities for 2020.

Personalization Mall’s main source of revenue comes from its collections of keepsakes (holidays, weddings, etc.) that it will personalize after order in a minimum of two business days. It also provides personalization platforms for Bed Bath & Beyond (BB&B), which it will continue to do under its new ownership as well as bringing those services to 1-800-Flowers.

“PersonalizationMall’s extensive product offering and industry-leading personalization capabilities will be an excellent addition to our growing family of popular gifting brands,” 1-800-Flowers CEO Chris McCann said in an announcement of the acquisition. “It … will help us further our company’s vision to inspire more human expression, connection and celebration while enhancing our position as the leading one-stop destination for all our customers’ celebratory and gifting occasions.”

According to McCann, PersonalizationMall.com reached more than $150 million in 2019. The purchase was made via cash and will be integrated into the 1-800 bottom line in fiscal 2021. The acquisition includes the PersonalizationMall.com website and a 360,000 square foot production and distribution facility in Illinois. PersonalizationMall.com will become a wholly owned subsidiary of 1-800-Flowers.com, Inc. PersonalizationMall.com’s product offerings include what it calls a wide variety of  personalization processes achieved through a “highly automated personalization process and rapid order fulfillment.”

1-800-Flowers was candid about the ancillary benefits of the deal. Among them: a new customer database, consisting of both consumers and corporate accounts; a web and mobile-based company that will bring new supply chain and product development innovations; and a company with growing customer metrics.

The deal comes at a critical time for Bed Bath & Beyond. Its last earnings announcement was a disaster. While analysts expected a good holiday season to bring a small profit per share, the company reported an adjusted loss of 38 cents a share. Same-store sales dropped 8.3 percent compared with the year-ago quarter.

Commenting on the transaction, Bed Bath & Beyond President and Chief Executive Officer Mark Tritton said, “This transaction is another important step towards simplifying our portfolio and deepening our focus on our core Home, Baby and Beauty businesses. By unlocking valuable capital from within our business, we can accelerate the Company's ongoing business transformation and our efforts to re-establish Bed Bath & Beyond's authority in the Home space.”

Beyond the new revenue source and customer data, 1-800-Flowers will also have a chance to smooth its checkout process with the stepped up personalization processes. While the recent PYMNTS Checkout Conversion Index didn’t specifically call out personalization as a key capability, personal product recommendations and automatic form fill were highly ranked features for successful retailers who removed friction from the checkout process. At the end of Q4, the overall PYMNTS Checkout Conversion Index score was 54.6, an increase of 3.2 points since Q1 (an increase of 6.3 percent). This translated into approximately $97.8 billion in sales merchants put at risk due to checkout friction, a 43.7 percent decrease in less than a year’s time.

It will be interesting to see if 1-800-Flowers pushes its new acquisition into more predictive analytics and even artificial intelligence (AI)-based technologies. Both will become critical parts of the eCommerce personalization experience, according to Lineate Chief Revenue Officer Elizabeth Gallagher.

“In order for a predictive analytics algorithm to work, you need data points that will allow you to you guessed it, predict who your customer is, what they care about, and what might influence them to buy,” she said. “Brands should also pull data from customers with similar backgrounds for further clues into what nudges certain groups of people to buy. Once you’ve identified ones you’d like to predict, it’s ML’s job to find patterns based on the data you give it to help you focus on the data points most likely to lead to conversion.”

While the Personalized Mall deal spells expansion for 1-800-FLOWERS it also shows that there’s a lot of innovation left in the eCommerce supply chain and checkout experience.

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