E-fulfilment in the case of Fleurop GmbH

01. September 2001



Fleurop GmbH has already been offering its customers an especially pleasant possibility to send flower gifts all over the world since 1997 with the e-business offer www.fleurop.de. Through the launch of the fulfillment solution Paybox an interesting alternative to payment by credit card now exists at Fleurop, namely safe and convenient payment by mobile phone. The company has therefore once again proven its immense innovativity – and has been able to pay back its investments in record time.


1. The company

Anyone wishing to transport flowers over long distances is confronted with the problem that the sensitive goods are bound to be damaged in the process. Often, though, especially people who live a long way away are the ones we want to give pleasure to with a flower gift. Fleurop has made it its business to solve this problem. The both simple and convincing solution is namely that the flowers themselves do not embark on a journey, just the gift order. This is carried out by a specialist florist’s in the recipient’s town, who puts together a fresh version of the requested bouquet and delivers it to the gift recipient immediately.


Background
The idea of replacing the transportation of goods with the transfer of order information appears especially characteristic of the IT-dominated times we live in. In Fleurop’s case, however, it is considerably older and goes back to the Berlin flower seller Max Hübner, who already founded a “flower-donation brokerage association” in 1908 and thus laid the foundation for the today’s company.

Since the thirties Fleurop has existed in the legal form of a GmbH which carries out billing for the affiliated independent florist’s companies, advertises the joint product, monitors compliance with quality standards and also provides the IT infrastructure.

At the present time Fleurop looks after a dense network of approximately 7,000 florists in Germany and can therefore offer its service region-wide. On account of its membership in international umbrella organisations, it is also possible to forward orders to international affiliates, so that flower greetings can be relayed worldwide with Fleurop.

The company has approximately 75 employees in the Germany and delivers 4 million flower orderes a year here. Fleurop GmbH funds itself via commission for the individual orders and via contributions from the affiliated specialist florist’s. The company’s self-image as an “organisation in the guise of a GmbH” means that no profits are to be generated with its business operations. Any surpluses are rather invested in advertising measures which benefit all participating florists.


Industry
The florist’s industry in Germany is still strongly fragmented. The majority of sales are generated by small independent companies who mostly operate no branches or only a few branches and only operate locally as a rule. Against this background, Fleurop takes on a key function in the brokerage of region-wide orders [order brokerage]. As there is no other florist’s network in Germany with a similar coverage and importance, Fleurop has also not been subjected to any notable competition so far. With the emergence of online flower senders and gift services in the Internet this situation could change. Admittedly, these new competitors are still faced with the problem that flowers are damaged when transported over long distances. The significant improvements in the field of logistics make careful observation of these activities seemingly imperative for Fleurop.


Product
Orders are typically processed as follows: A client in town A contacts a local florist’s that is affiliated to the Fleurop organisation. It places the order to deliver flowers to a recipient in town B and states in addition to the name and address of the gift recipient the type, scope and delivery date of the flowers and a greetings message. The price of the gift and a service and delivery charge is paid to the florist in town A. The latter forwards the order by fax or via the Merkur computer system developed by Fleurop to a florist in town B. The latter puts together the flower greeting on the requested date and in line with the order individually and delivers it to the stated address. Billing of the service between the two participating florists is carried out via the Fleurop head office.


Target group
Even if the age group between 25 and 39 is viewed as being particularly lucrative, Fleurop addresses a considerably broader clientele with its range of products. In doing so, the company benefits from a supported brand awareness of over 95% in the population as a whole. In addition to private customers, companies are also increasingly being recognised as an important customer segment, who are to be made aware of the attraction of flower gifts, e.g. for presales and aftersales activities, staff motivation or in complaint management. The marketing of these specialised products is carried out under the Cadeaux brand, for which Fleurop operates a separate webside (www.cadeaux.de).


2. e-business vision and e-business strategy

Fleurop sees itself as a service provider that makes it possible for affiliated specialist shops to concentrate on their core expertise as florists and to nevertheless offer “the heartiest connection worldwide“ (slogan). Changing behaviour patterns and expectations of customers over the last few years have resulted in them attaching more importance than ever to convenient processing and fast delivery of the flowers. Fleurop already reacted to this trend in 1997 with the establishment of its Internet offer. Thus, it is possible to place an order conveniently within a few minutes without having to seek out a Fleurop florist’s.

Fleurop’s vision:
Fleurop GmbH wants to make it possible for its customers to make a person happy at the other end of the globe at the “snap of a finger”.


Strategy
The internet presence of Fleurop in many ways reflects the stated vision of a time-saving and uncomplicated order option. This is expressed in aspects such as the design, information range, operation and, last but not least, the deployment of a modern and safe payment system.


The provider’s e-business concept
The current second version of the www.fleurop.de Internet presence has intentionally been kept plain and simple and concentrates on the essential information services and functions for an order. When choosing a flower gift, the customer is supported by an overview of current bouquets and a “flower assistant”. The latter offers the possibility of choosing bouquets in advance based on criteria such as colour, design type, recipient and occasion. Thus, the flower assistant presents bouquets which are for example especially suitable as a gift for a girl friend or for a certain anniversary.

Fig. 2.1: The website of www.fleurop.de
Fig. 2.1: The website of www.fleurop.de


An example photo is displayed for each bouquet. The customer can choose from three price suggestions and thus determines the size of the flower gift. In a few steps it is guided through the ordering process and its information is checked for completeness. It can choose from three payment alternatives:

  • In the case of payment type [payment solution] “by credit card online” the credit card data is transferred to Fleurop via a safe SSL connection. All card types in circulation in Germany are accepted.
  • Anyone not wishing to transfer its credit card information via the Internet, despite the SSL encoding system, can chose the payment type “by credit card offline”. In this case, the customer receives an order form to print out, which they complete in handwriting and can send to Fleurop by fax.
  • With “Paybox” Fleurop offers a very new payment procedure that works without credit card and allows payment by mobile phone. This payment alternative is described below in detail.

If orders reach the supplying florist by 3.00 pm (Saturdays by 11.00 am), they can - if requested by the customer - by delivered on the same day in the respective locality.

The opening of an online distribution channel was also not quite conflict-free at Fleurop. The initial scepticism that surfaced amongst some of the affiliated florists has, however, now disappeared in the realisation that a successful e-business commitment is only possible with central coordination and based on the strong “Fleurop” brand. For the individual florist’s, the brokerage commission lost as result of the online orders is balanced out by the orders which would not have come about without the customers attracted via the new channel. Last but not least, the fact that amongst Internet users the particularly attractive group of young, high-earning, male customers is still overrepresented means that Fleurop’s e-business activities will also have a positive effect at the end of the day for the afiliated flower wholesalers.

Tab. 2.2: Sales components for florists before and after opening the online channel
Tab. 2.2: Sales components for florists before and after opening the online ch




Scope of services
The website www.fleurop.de is assigned to the e-selling segment, with private and corporate customers being addressed equally. By linking the solution to Fleurop’s SAP R/3 system, the continuous internal processes within the scope of orders are also largely supported. A fully-automated release of orders to florist’s in the locality has consciously been dispensed with. The installed manual release of orders by employees at the Fleurop head office guarantees that even in the case of express deliveries – which are especially frequent where online orders are concerned – capacity problems are spotted in good time. In such a case, the delivery can nevertheless be carried out on the same day as a rule by relying on feedback and maybe switching to another affiliated specialist enterprise.

The Fleurop website enjoys great popularity. Orderes submitted online meanwhile make up 5-10% of the total volume – with numbers on the up. Each day several hundred orders are received via the website with an average order value of approximately DM 60.00.

Other Fleurop e-business activities include:

  • the mobile commerce solution “Fleurop WAP Store” (wap.fleurop.de), with which orders can also be submitted via WAP-capable mobile phones.
  • the “Merkur”/”MerkurNet” extranet for automating proceses between the Fleurop head office and affiliated florists,
  • the B2B weeb presence www.cadeaux.de via which corporate-based flower greetings are advertised.

Partner
Fleurop cooperates with a number of partners from different sectors when implementing the e-business solution.

Fulfillment partner
Credit cards are from the outset an accepted means of payment at www.fleurop.de. Credit card payments are checked, authorised and billed online via CyberCash GmbH (www.cybercash.de).

In order to be able to offer an especially safe alternative and to address customer groups, who cannot or do not want to pay by credit card, payment by mobile phone has also been possible since the end of 2000. For this, Fleurop entered into a partnership with Paybox Deutschland AG. The Paybox solution is outlined in detail in the following chapters.

No new partners had to be called in for the goods logistics. Flowers are still delivered via Fleurop partners.

ERP provider/information partner
At Fleurop, the SAP R/3 ERP system is used. The system is looked after by Condat AG (www.condat.de) that was also responsible for the launch of the Extranet and the WAP store.

Internet agency
The web presence www.fleurop.de was developed by the e-business service provider Syzygy (www.syzygy.de). Syzygy also looks after hositng and the operation of the web application.


3. Paybox fulfillment solution

Within the framework of fulfillment, Fleurop has an especially innovative solution offering with a payment option via mobile phone, which was realised with Paybox Deutschland AG.


Type of fulfillment service
Paybox offers a payment system where a high level of security is achieved by combining various communication channels:

  • Transactions are triggered via the Internet.
  • The authentication and authorisation of the debtor is carried out by inputing a PIN via the mobile phone network.
  • Payment is processed via the bank network, with the amount payable being booked from the customer's current account.

In this way, payment of online purchases is possible without credit cards or account numbers having to be transmitted via the Web. Paybox therefore tries to deal with one of the strongest purchase obstacles in Internet trading at present.


Solution of fulfillment partner
Paybox offers three standardised variations for its payment system. The “Paybox Standard Service” utilised by Fleurop includes the following components:

  • The authorisation and automatic release of payments means that payment transactions are confirmed by the customer in real time by mobile phone and the invoice amounts are collected after a predetermined period of time of Fleurop’s choice by direct debit.
  • In an Extranet Fleurop staff can view Paybox payment lists via the website of Paybox and can trigger processes such as cancellations and credit notes. Access to the Extraneet is also protected via a PIN which is retrieved from the system via a telephone call.
  • Transaction reports are provided in electronic form and allow wide-ranging evaluations.
  • The “I Box” competence centre supports Paybox partners such as Fleurop when installing and integrating the service into their own e-business application. The I Box is also responsible for system monitoring and remote maintenance.

At present Paybox has more than 260,000 registered users who can pay via the system. In addition to using it for making purchases at around 1,000 different Internet providers, end customers can also use Paybox to pay at around 4,000 providers in stationary trade, for taxis and other mobile service providers. Furthermore, it is also possible to transfer money from mobile phone to mobile phone and to other bank accounts (consumer-to-cosumer payments). A payment option for vending machines is currently in the pipeline.


Costs
The extension of Fleurop’s Internet presence to include Paybox payment functions only caused minimal costs totalling DM 4,000. The operating charges are not markedly different to those for credit card payments. Fleurop customers do not have to pay anything extra for using the payment process.


4. Implementation

The functional mode of the Fleurop and Paybox fulfillment solution is to be explained first based on an ordering process before system introduction and technical details are dealt with.


Processes
To enable a customer to pay via Paybox, he/she needs a current account at a bank of their choice and whichever mobile phone they prefer. The customer must also have registered with Paybox. The unique registration procedure at www.paybox.de takes less than five minutes. Paybox orders are placed and executed [order processing] at Fleurop as follows:

  1. The customer selects a flower gift on the Fleurop website (if necessary by using the flower assistant) and clicks on “order now ”.
  2. The addreses of client and recipient as well as delivery date, greetings text and delivery information are recorded in an online form.
  3. The customer selects “Paybox” as the payment type and gives his/her mobile telephone number. Anyone not wishing to reveal this number can also have an alias number set up which is not identical to the telepone number.
  4. Within a few seconds the speaking Paybox computer calls the customer’s mobile telephone and repeats the payment recipient and amount. Then the customer is requested to authorise payment.
  5. For authorisation, the customer enters his/her personal secret number (PIN) via the numeric pad of the mobile phone.
  6. After authorisation has been completed, the online order is concluded. Paybox confirms to the customer the payment acoustically and by email or text message. An appropriate message of confirmation is also displyed on the Fleurop website. The authorisation process takes less than 30 seconds altogether as a rule.
  7. Fleurop also receives a payment confirmation from Paybox and can now forward the order to a suitable florist in the recipient’s place of residence.
  8. As soon as the order is released by the Fleurop head office a brokerage confirmation is sent to the client by email.
  9. The flower greeting is delivered to the recipient at the stated time.
  10. Paybox collects the invoice amount from the client by direct debit.
  11. Fleurop receives a credit note for all orders paid with Paybox at 2-weekly intervals.

Fleurop staff can view transaction data, change payment targets or trigger cancellations or credit notes at any time via a protected area in the Paybox website (Extranet).


System introduction [system integration]
When it came to introducing the payment method “Paxbox“ at Fleurop, a few technical and ogranisational adjustments were required:

Integration of the payment system into the existing e-business solution was carried out in cooperation with Playbox and Syzgy, the Internet agency of Fleurop. The Playbox system has a large number of interfaces (so-called cartridges) for all standard platforms, Internet technologies and shop systems. The competence “I Box” also offers wide-ranging support during integration. The necessary technical modifications could therefore be carried out in a relatively short time and at minimal cost.

From an organisational point of view, smaller modifications were necessary in Fleurop’s order processing system. The main aim here was to train the employees affected in dealing with the data transmitted by Paybox and the Paybox extranet. In particular, procedures for comparing data with the SAP R/3 system and for carrying out a random check of payment information had to be established.


Technical platform [system architecture]
Fleurop operates the SAP R/3 system, the components required for the extranet, and an informix database system in its own premises on Windows NT computers. The online appearance www.fleurop.de was developed on the basis of Microsoft Commerce servers and is hosted by Syzygy.


Architecture
For the introduction of Paybox, the e-business architecture of Fleurop was extended to include a further software component, the Paybox Local Host Listener. This runs in a Java runtime environment on the computer operated by Syzygy. The task of the local host listener is to communicate with its counterpart, the Payment Listener at Paybox for the transfer of all relevant data between Fleurop shop and Paybox system. Communication is carried out via an SSL connection with 128-bit encoding and is additionally protected by further measures.

Fig. 4.1 shows the main components of the e-business architecture and explains the information flows when accepting and processing an order. The numbering of the arrows refers to the process steps described in Chapter 4.

Fig. 4.1: Architecture components and communication relationships
Fig. 4.1: Architecture components and communication relationships

5. Success factors

With Paybox Fleurop has supplemented its website with an attractive payment alternative. This extension was carried out in accordance with the e-business strategy of making sending flowers as gifts as convenient and simple as possible. The company is still extremely satisfied with the decision to enlist the services of Paybox.

Specialities of the solution
Fleurop is one of the first companies to have introduced Paybox and has therefore proved a high level of innovation in an industry that is generally considered to be somewhat conservative. The remarkable thing is that both the workload and costs involved turned out to be extremely minimal, so that the introduction of the Paybox payment system has already repaid itself due to the associated advertising effect alone.


Unique selling proposition
Essentially there are two important reasons for using Paybox at Fleurop:

  1. The circulation of credit cards in Germany is still less pronounced than in the USA, for example. At the end of 2000, only approximately 22% of German citizens over 14 years had this payment option. Mobile telephones are more than twice as widespread and therefore open up a purchasing group for Fleurop that was previously not a possibility for online business.
  2. Many customers are still very reluctant to transfer credit card information via the generally unsafe transmission channel of the Internet. Even if security can be significantly increased objectively through measures such as SSL encoding, the subjective feeling of insecurity still presents a considerable obstacle for purchasing online with a credit card. Fleurop can now offer a payment alternative with Paybox which works without transferring sensitive information and through payment authorisation by phone call and PIN input additionally provides a security mechanism that is easy for customers to understand.

Ultimately, Fleurop underlines through the early introduction of Paybox a high innovative willingness and consistent efforts to provide an order acceptance procedure that is as convenient and simple as possible.


Changes
At present, approximately 15 to 20 online orders are paid each day at Fleurop using Paybox. Given the increasing coverage of the Paybox system, it can be assumed that this figures will significantly increase in the future. From the point of view of costs, payment by Paybox is no less attractive for Fleurop than the credit card alternative, as charges are accumulated to the same extend for both procedures.

An aspect not to be underestimated is the considerable advertising effect that has been produced for the e-business offer of Fleurop overall. Thus, it can be assumed that the introduction of Paybox has definitely provided a contribution to the constantly increasing online sales of Fleurop.


Lessons learned
The Paybox connection has run reliably and without any notable malfunctions since it was put into operation in December 2000. Fleurop has not heard of any customer complaints in this period. Especially in the initial phase, however, inconsistencies between order and payment data had to be cancelled on several occasions. When compared with a fully automated adjustment method, manual controls have to date proven more cost-effective. In some cases, additional enquiries were necessary with customers. Orders were only lost for this reason in very rare cases. The exact cause of these incidents could be traced, but it is suspected that they are due to the defective integration of systems and coordination problems between the three partners involved, Paybox, Syzygy and Fleurop. The lesson to be learnt is that - especially when working with external partners - a high level of commitment on the part of all the participants is essential to ensure the smooth introduction of the Paybox system.

All in all, Fleurop is very satisfied with the Paybox partnership and points out that there were similar initial difficulties with the integration of the credit card payment system at the onset of e-business activities in 1997. One factor which is crucial to the generally positive impression, in addition to the fast repayment of the system, is the professional care provided by paybox Deutschland AG. At Fleurop they are eager to see how quickly Paybox will succeed in further increasing the number of registered users.


Owner/s of the solution

Fleurop GmbH
Niklas Dörr, Authorised Signatory
Christine Wagenhaus, Head of the Order Dept.
Industry: Wholesale & retail trade, Specialist Florist’s Trade
Company size: large-scale enterpriseFleurop GmbH

Solution partner/s

Philipp Baier, Project Manager
paybox deutschland ag

Case study author/s

Andreas Voss
Universität Bern

01. September 2001
Voss; Andreas (2001): Fleurop GmbH case study in: Schubert; Petra; Wölfle; Ralf; Dettling; Walter; (Ed.; Fulfillment in e-business – Practical concepts by innovative companies; pp. 173-186; Munich; Vienna: Hanser Verlag; 2001.

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