The online flower shops industry in Australia has well and truly come to life, having flourished over the past five years, according to a report by IbisWorld.

Industry revenue is forecast to grow at annualised 7.3 per cent over the five years through 2013-14 to reach $73.2 million. This includes revenue from existing retailers branching out into the online segment, purely online flower shops and order aggregators.

IbisWorld industry analyst, Andrei Ivanov, says: “the strong growth is attributable to a wide acceptance of the internet as a shopping medium, combined with improvements in consumer sentiment and discretionary income.”

In 2013-14, industry revenue is forecast to grow by 3.1 per cent.

Consumers have been relatively quick to accept online flower purchases over the past five years. This is particularly true for gift baskets and flower arrangements.

“Online flower shops have a significant advantage over traditional bricks and mortar retailers because they can display a wide range of products online and execute orders as they come, minimising stock costs,” says Ivanov.

Despite this, the success of penetrating the household market has not yet been replicated in other market segments, such as wedding venues and funeral homes, with only a handful of enterprises servicing such clients. These markets contribute a large portion of revenue to the Flower Retailing industry, and are an area of potential growth for online flower shops.

The industry exhibits a moderate level of market concentration, with Interflora and Teleflora currently dominating the landscape.

Online flower shops spend an abnormally large amount of resources on marketing, even more than other online shopping industries. Strong brand recognition and customer awareness are paramount to success in this industry, especially for enterprises operating on an order aggregating business model.

The industry is expected to continue growing over the next five years, however, declines in consumer sentiment could curb discretionary spending, which remains a threat for the industry.

Furthermore, it is anticipated that future growth will be less dependent on the uptake of internet as a shopping medium. Instead, industry participants will have to invent ways of capturing those market segments that are currently serviced almost entirely by retail flower shops and professional florists.

For more information, visit IbisWorld’s Online Flower Shops report.