#361 - From Ecuador to Your Table in 24 Hours: How UrbanStems Built a Time-Critical Supply Chain

0:05Meenakshi Lala:This is D2C Pod, where the worlds of creators, consumer goods, and brands collide. We get behind the wheel to show you how today's biggest products and ideas are made, launched, and scaled. If it's shaping the future of commerce and culture, you'll hear it here first. Catch new episodes weekly on Spotify, Apple Podcasts, or d2cpod.com. Be sure to check out our newsletter for weekly breakdowns and recaps linked in the show notes. So before we kick off today's recording, I've got one more for you. E-commerce costs are rising. USPS changes alone could push delivery costs up more than 25 % this year.

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1:17Meenakshi Lala:What is going on DTC pod today we are joined by Meenakshi Lala who is the CEO of Urban stems. And I'm really excited to have this conversation today because not only does Minakshi come from an exceptional background as it pertains to fashion and very popular consumer brands that you guys are all familiar with, but when it comes to operating a flower business online, it isn't necessarily the easiest thing. So in order to achieve the scale that you guys have done, you need to really have your operations in order. And today we're going to be diving into everything about what it takes to grow and scale one of the largest and most successful businesses in the floral space.

2:01Meenakshi Lala:So without further ado, Minakshi, let's get into it. Why don't you give us a little bit of background about yourself, your career? What led you into the CEO role at Urban Stamps?

2:12Blaine:Hi, so nice to meet you and thank you for having me here. Very excited to share my story and share the story of Urban Stance. I spent two decades of my life in various sized businesses within the fashion retail vertical, businesses at different stages of their life cycle. And, you know, when I'm asked this question now, I say, well, I came to flowers because I wanted to do something harder. But obviously, it's a joke, but in reality, it's the truth, Perishable product and floral specifically within Perishable are by far the hardest product category to be in. But I have tremendous, you know, I've been blessed with the opportunity to work for tremendous businesses in fashion retail, businesses at every scale of their life cycle, various product categories, luxury to contemporary designer.

3:04And that sort of, that experience built

3:07Blaine:me and built my career up, built my experience portfolio up to really drive operational excellence in this business. And for florals, which is a very complex product category by nature of its perishability, being a true operator, being a solid operator, having excellent operational excellence is a given. It's a baseline requirement for coming to this business. I was hired by the prior CEO to come to Urban Stamps as the chief operating officer. I spent 18 months in that role, bringing all of my experience and learning about the floral space, candidly. There was so much to learn. This was an industry and a product that I knew nothing about.

3:52Blaine:I am still learning three years into it, but 18 months of changing how we think about supply chain, changing how we think about scalability, changing how we think about accuracy within planning and forecasting. And from then, you know, I was given the honor by the board and the shareholders to take on the CEO seat. And it's, you know, my 30th anniversary coming up very soon at Urban Stamps. 30th anniversary at Urban Stamps and second year anniversary as CEO of Urban Stamps.

4:21Meenakshi Lala:Well, congrats on that. I'm excited to get into the growth and the story, you know, under your leadership. But, you know, maybe we start with some of your other experience in retail. I'd love to kind of set the stage. You know, you said you worked in retail, in, you know, I think in jewelry and some really popular brands. Could you name those brands that you worked, what your role was, and maybe what some of your learnings were along the way as you were coming up and cutting your teeth in your career?

4:49Blaine:Absolutely. I, again, as I said, I had the pleasure and honor of working for some privileged, noteworthy brands within the fashion retail space. Alison Olivia, Ali Tahari, Irving Legere, Elizabeth and James, BCBG, Juicy Couture, some really heritage brands and businesses that the foundation of which was set to really drive innovation, to really drive change in what had become a very mundane sort of expected space. Some of the designers here, like Alison Olivia, like Arve Legere, really brought out innovation, really brought out change within fashion. And some of my learnings from working in these businesses were brand sits at the forefront of everything you do.

5:42Blaine:This is something Ali Tahari taught me. This is something Alice Olivia taught me. All of the businesses I worked in. Trends change. Marketing tactics change. Acquisition tactics change. But what stays and businesses that succeed are the businesses that stay at front and center of their brand ethos. As they stay true to their brand, true to their product, those are the businesses that continue to grow. Today, this morning, we woke up to the news that George Romani passed away at 91 years of age. But that is an example of how a brand continues to maintain its heritage, stay relevant in spite of all of the saturation the vertical has seen by staying true to its brand ethos.

6:22Blaine:And that is the pedigree and knowledge and expertise that I have tried to bring at Urban Stamps and we continue to build on through the course of my tenure here.

6:32Meenakshi Lala:Yeah, I think it's so important what you mentioned about brand, right? Like all of the brands that you mentioned are household names. They all have like a brand and an essence, and they're not just scale up, changing their identity every, you know, with with whatever direction the wind changes. They're they're established brands. They've got identities. And and that's what makes them, you know, iconic and makes people buy them year in and year out. So I'd love I think this is a natural point to transition to Urban SEMS, right? Like you come over, you move into an operational role. What does that entail?

7:06Meenakshi Lala:You said you were doing a lot of learnings along the way. So, you know, what does it mean to be the COO of Urban Stems? What are the duties? What falls onto your desk? And what did you have to learn on the job as you were getting acquainted with the new space?

7:20Blaine:So the challenges that I experienced as CEO of Urban Stems were so different than anything I had experienced in my career up until that point. In a week, I could be talking to my supply chain team about a snowstorm that is supposed to hit some of the key cities during Valentine's Day. In another week, I could be talking about a volcano that has erupted in Ecuador on a mountain that, you know, has a lot of our floral farms. And in another week, it could be, you know, dealing with high temperatures that have resulted in now our florals not being able to ship at the highest level of quality that we want to give our customers.

8:05Blaine:So those challenges were very unique to me coming from a non-perishable product space like fashion retail. You know, yes, some will say fashion is perishable, too, because styles and trends expire. But the physical product doesn't dissipate, which is what happens in flowers when you're working with flowers. And those were challenges that I had not experienced. There was a lot of learning to be done on how we approach pivoting our supply chain, how we approach dealing with demand, dealing with sourcing in moments like these. And these are real issues that plural businesses experience. Fundamentally, though, I think what prevailed was through all of our diligence in troubleshooting and problem solving.

8:45Blaine:Fundamentally, it's the agility, the innovation, out-of-the-box thinking. Businesses that have agile supply chain and operations facilities, businesses that can pivot and really think about how do you de-risk, how do you move your supply chain when moments like this? I mean, recently we experienced that for tariffs as well, and some businesses thrived and some businesses really took a hit. So to me, fundamentally, as an operator, it's about having a supply chain, having an operational network that is agile and can pivot depending on the challenges you're experiencing. Yeah.

9:19Meenakshi Lala:And I think this is such an important point. And so a topic that we've been talking about a lot because so much on one hand of a brand is what you were saying. It's the brand ethos, the designs, the feeling that it makes the customers feel. But in order to really achieve that, at the end of the day, you're running a business and that business needs to be operationally sharp. It needs to deliver the product. And so many things happen behind the scenes to, in your case, get a flower to a customer, you know, like you were saying, dealing with supply chain that originates maybe in another country, being able to store and warehouse that product and store it in a parish that is a perishable product in the States before it makes it out the door.

9:59Meenakshi Lala:You're dealing with forecasting. You're dealing with, you know, a perishable inventory. You're dealing with different product SKUs and how they're arranged. So there's so many moving parts. And I'm really excited to go deeper into this. But maybe before we do that, I'd love if you could just characterize the landscape, right? Like, where does Urban Stem sit in this landscape? what if you could walk us through even just like a brief history call it of like the e-commerceification of flowers right because it wasn't so long ago when you know buying flowers on the internet just was not an option and then we we kind of saw a boom and now it's like maybe the most convenient way to do it if you're not in a location where you have a local florist that you you know you know and it's an easy way to get exactly what you want when you want it or say you want to deliver to, you know, a friend or a loved one on the other side of the country.

10:51Meenakshi Lala:You know, you can't just go to your local florist and say, hey, you know, I want these flowers for my friend on the other side of the country. So, yeah, why don't you just walk us through the landscape? What is it like?

11:00Blaine:Yeah. So the floral industry is an extremely complex, but a very unique and interesting industry for for as a consumer. if you want flowers there are so many channels that you can obtain flowers through you can go to your grocery store and get flowers you can like you said reach out to a local florist and get your flowers you can um you can grow them yourself like a lot of people like to but fundamentally that is when you are servicing yourself um when you think about gifting or sending which is what urban stems does when you want to gift a loved one when you want to gift COVID was a perfect example of when you couldn't see your loved ones, you couldn't see your friends and family, you couldn't wish people or be with them during moments of when they had experienced loss.

11:48Blaine:Sending them flowers was a big sentiment, was a huge sentiment. That's what businesses like Urban Stems do. And that's where the e-commerce, the evolution of flowers has existed. The complexity continues to drive the how and how businesses continue to evolve within floral e-commerce. and why that didn't prominently exist years prior was because shipping flowers in a box is extremely complex. The entire supply chain process for bringing flowers into the country or bringing them to you as a consumer is what we call cold chain. Flowers have to travel refrigerated. Flowers do not thrive in temperatures outside of 37, 38 degrees to 50 degrees.

12:37Blaine:Anything warmer or cooler will kill the flowers. And that is very, very complex to achieve and maintain from a supply chain standpoint. So within e-commerce, there are two most common ways to fulfill flowers are, you know, what we call wire service, which is a business, you know, like a 1-800-Flowers collects your order, passes it to a local florist who then fulfills for you. That's great in big cities like New York City and L.A., where there are incredible florists who can put together an amazing arrangement to make it look exactly like what you purchased. But when you start going to your point to like smaller local cities and local towns around the country, it's demand and supply.

13:19Blaine:Those florists are not necessarily sitting with all the stems that are featured on the site at all times. And that's where substitution comes into your play. So as a consumer, your vision for what you ordered may not be delivered. And the other example is, you know, a ton of e-commerce businesses ship farm direct, where the product has to travel from the farms to your home, in which case you have to order, case you order three, four, five days before your expected delivery date. And we all know, thanks to Amazon, we are all so trained to receive our product today or tomorrow. The same day and next day dinner re-sentiment is big, especially in the floral space.

13:54Blaine:Because if you hear today, oh, someone lost a member of their family and you want to send them flowers, you're not waiting a week to send them flowers. You want your flowers to get to them the next day. Urban Stems has this unique supply chain where we source our inventory with our farms. Our New York studio designs all of our bouquets with our farms in partnership with our farms. We work with farms around 13 countries around the world. And we bring in the product in-country to the United States through colche. It's all end-to-end refrigerated. The product is then housed in seven refrigerated fulfillment centers around the country.

14:33Blaine:Because again, lectorals have to ship in 24 hours. They have to get to you in 24 hours. And depending on your geography and your order placement timing, the product is then delivered to you from one of the fulfillment centers. So that's what makes us unique. Urban stems can truly stand out and say to you, not only are you getting high quality, high design, which to me, by the way, is table stakes. If you are going to be a floral business, you better be shipping high quality flowers because you're not in the business to ship that flowers to your customers. So that's table stakes. But what urban stems can confidently stand for is you will get what you see.

15:08Blaine:What you order is what will be delivered to you. There will not be substitutions and you will get them same day and next day. So your date, the date that is really critical, whether it's a birthday or an anniversary or a Valentine's Day or a Mother's Day, your flowers will be delivered on that day. Wow.

15:23Meenakshi Lala:So that's really impressive from a supply chain perspective in terms of what's happening under the hood. So you're basically saying that when, you know, if I place a same day order, these are flowers that are coordinated, probably coming from another country into the States the day of. And then basically the next day they're being arranged. Right. Because obviously that there's there's an operational element on the fulfillment side of having to arrange them. So how how does that happen? Because like you're not getting the the the the florist isn't in, you know, another country arranging the flowers.

15:58Meenakshi Lala:You guys are getting the products and then you have to assemble them in in the US. Is that right?

16:03Blaine:No, so actually the farms, so our design and merchandising team travel to the farms around the world that we work with and work with them on the design and planting process. We forecast our planting cycles a year out. So, for example, the product that we are going to sell on Valentine's Day this year is forecasted for. It's planted. It's growing on the farms as we speak. That inventory is committed to. But we have also trained our farms over the years to work with us and build the bouquets for us. So they do indeed put the bouquets together for us at the farm. So whether it's a farm in Ecuador or Holland or Colombia, those farms are putting the bouquets together, but to our recipes, to our design.

16:46Blaine:We send down spec sheets that are written specifically down to the stem length of what your bouquet stem length should be. And it's QC. So if your stem length is an inch or two shorter, it will be rejected at quality control. Rest assured, you are not going to get a bouquet with shorter stems than what we asked for. Because as a consumer, we want you to have the best physical experience and the product on your table to look as close as it does in that professional shot that you see on the website. So the product then in bouquet form travels through refrigerated supply chain and comes into the United States.

17:23Blaine:Our fulfillment centers can QA each bouquet to make sure they're excellent quality before it is then put in a box and shipped to you to enjoy on your dining table or coffee table. Awesome.

17:36Meenakshi Lala:One thing I'd love to talk about while we're on the topics of international supply chains, we've obviously had a lot going on with tariffs. And then obviously you're dealing with customs on every single order and, you know, products can get caught up in customs or inspected by, you know, all sorts of agencies. But for you guys and a product that needs to happen, you know, so quickly, how are you able to ensure that, you know, you're able to keep that supply chain moving? Because, like, for example, like if your product is perishable and it's coming in and, you know, someone says, oh, well, let's inspect this.

18:13Meenakshi Lala:And it's a Friday and the next thing you know, it's a Sunday Monday and you're like, wait, my product's still not here. So how do you guys manage, you know, think about supply chain, given the stakes of your product and how it's perishable?

18:27Blaine:Sure. So two parts to the question. I'll talk about tariffs first. So tariffs are an ongoing challenge in the geopolitical climate that we are living in. However, the approach Urban Stems has taken is our consumers value curation and quality. They value premium bouquets that are designed for them with high-quality stems. Our consumers are very savvy. They're very smart. They know the product. They know what it takes to bring those premium stems from around the world to their table. As long as the curation is high-end and high-quality and personalized, they are willing to invest more dollars in the bouquets that are being offered to them.

19:07Blaine:So the approach that we've taken is we're not just going to increase our prices. We're not going to go for that model. We are going to change our assortment to be high design, high curated. So when I'm coming to you and charging you X percent higher than what you typically pay for a bouquet, the value you're getting from the bouquet is obvious. It's not just in increasing the price, but is in offering you a more unique and curated arrangement for your table. And our customers have really responded well to that. The other element of how do we manage supply chain, the shelf life of our product, once it hits our fulfillment centers, is five days.

19:45Blaine:If it doesn't sell it in five days, that's the end of the life cycle of that product, which means it gets tossed out because it is no longer shipable. So not having a robust supply chain that ensures there are no delivery delays is life in depth for this business. Because if that delivery delay does slide in a week, we will have no inventory to sell. Weekly inventory is received at our seven fulfillment centers. So product comes in on a weekly basis from all our farms around the world. And for five, we have a five-day window to sell and fulfill the product before our next launch of inventory comes in.

20:26Blaine:The accuracy, the delivery accuracy takes, it's mobilized by several of our team members around the country who work very closely with every partner that is involved in the supply chain, right from our farms to our trucking partners, to the airlines, our logistics partners, to receiving it in the United States and having agriculture inspected, to then putting it on refrigerated tux to get to the Folk Women's Center. Every step of the way, we have our team on the ground, ensuring that there are no slips, there are no misses, that if there are any challenges or hurdles, we are reacting and responding to them as quickly as possible.

21:09Meenakshi Lala:Okay. So I want to get into the last mile part of the delivery and the customer experience and that end of the fulfillment side, because that's a beast all of in itself. But while we're on the topic of this, what you just said, you said, you've got five days, you have a perishable product. how do you guys think about and how do you manage the processes that are related to like inventory projections and management and getting as close to the ideal, you know, purchasing volume for your sales? How do you match those up and how do you reconcile it? I know you said you're projecting way out, but like how close are you guys able to come and how do you make all that happen?

21:45Blaine:Yeah. So planning and forecasting is a beast in this space. We have a team of planners who have extremely valuable experience from having worked in perishable products in their prior life. But they study our demand cycles. They study our consumer behavior. They study trends. They study, we feed a lot of fashion trends in our design and merchandising process. So our planning team and our merchants work very closely to what we call bet on the volumes per SKU for each seasonality to ensure that we're truly understanding why we want to put a certain amount of inventory in a certain SKU. And when do we want to amp it up in a certain cyclical cycle and then bring it down.