‘Stick To Your Core Competence': FNP Founder Vikaas Gutgutia On Early Business Diversification

Gifting is an important element of every celebration. No matter what is given, it is the intent which counts. While an array of gifting options are available in the market, some are more easily perishable than others, like flowers. Flowers are one of the top selling categories among gifting options. But how is a perishable product turned into a luxury product and what are unit economics that drive it? How do companies deal with the risks that come with perishability?

To understand this and more on how companies providing gifting options like flowers are run, The Core’s founder Govindraj Ethiraj spoke to Vikaas Gutgutia, founder and Managing Director of Ferns N Petals (FNP). It is an online and offline gifting company which started as a flowers delivery company, but is now, in a very diversified sense, taken over the gifting space. 

Established in 1994, FNP began as a flower bouquet delivery service. In 2023, with more than 320 stores across India, it is now a consequential florist chain. Speaking about the determinants on a day to day basis in the flower business, Gutgutia said, “Since I was used to doing this in Kolkata, I had some basic knowledge about how flower management and the flower engineering is done. So that your wastage is minimal and the pricing has to be done so that you can kind of take care of the perishable nature of flowers and the flowers which you lose. So I kind of mastered it further in Delhi by seeing how the flowers which have not been sold during the day can still be used towards the evening for some purpose and the wastage is minimum.” 

Here are the edited excerpts from the interview:  

Can give us a quick little bit of a history of Ferns N Petals, where you started, and more importantly, why did you start this clearly at a time when no one was venturing into bringing formalization into a very informal space?

It is like going back to 30 years, 1994. I was a graduate from Kolkata, and I had come to visit Delhi. And that was the time I discovered that Delhi as a city, lacks good florists because we had the same business in Kolkata, so I knew what flower business is all about. So since I was in college, I used to go there for an hour or two to help my uncle. I had a fair idea about how the flowers are and how they are sold and everything. But when I came to Delhi, I realised that there is a possibility and there is a vacuum for a good florist who can serve Delhiites better. And I think that was the triggering point where I started researching a little more and then FNP was started. 

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In the flower business, what are the determinants on a day to day basis? How do you manage stock? How do you ensure that most flowers, for the perishable reasons that I referred to earlier, leave the shop or the premises by the end of the day or maybe two days? 

That's probably the most difficult part because it is highly perishable, and it is not something which is a daily consumption product in our country. Of course, in Europe and the US people use flowers in their houses as well. But in India, flowers are mostly used for gifting purpose, and gifting is occasional. So an occasional product which is highly perishable in nature was a very difficult proposition. 

First of all, since I was used to doing this in Kolkata, I had some basic knowledge about how flower management and the flower engineering is done. So that your wastage is minimal and the pricing has to be done so that you can kind of take care of the perishable nature of flowers and the flowers which you lose. So I kind of mastered it further in Delhi by seeing how the flowers which have not been sold during the day can still be used towards the evening for some purpose and the wastage is minimum. And for that we started supplying to some institutional offices and hotels where we could supply flowers on a weekly basis, so that whatever we could not sell was consumed at a lower price, but wastage was reduced. And many such things, like getting into a happy hour towards the evening where people can come and book and pick up flowers. 

Somehow the most difficult part was the reason we didn't have many organised players in the market. All of them were small timers, roadside ones. So the initial journey was tough because managing the economy and the scale was different, and difficult also. But then gradually we kind of mastered that art and that's the reason we could succeed. 

 

What would be the trends? As in what are the kind of flowers that would, let's say, typically go out by noon or afternoon of the day? And firstly, also what time would they arrive at your shop and what is it that you would try and push towards more institutional customers, if you could give us that sort of breakup. 

The flower scenario at that point of time is very different from what it was 30 years back . It was very primitive. You just had few flowers which used to grow naturally in different parts of the country. These were used as the flowers for bouquets and celebrations, there was no commercial cultivation on a corporate scale, there was no organised floriculture farm, there was not much money which went into floriculture. So the flower availability was very, very poor. And we only used to get 4-5 flowers, typically gladiolus, rajnigandha, roses, which were naturally grown without any scientific methodology. And those were the flowers which we used to sell in our shops.

Of course, rose is the most perishable flower out of all these which wilts the fastest. So the idea was to sell the roses first, and then gladiolus and the rajnigandhas used to last longer. So those were the ones we tried to keep for a longer period. So that was the basic 4 or 5 flower scenario, so it was not difficult. Now, of course, we have hundreds of flowers and flowers come from all over the world and we have thousands of farms growing different kinds of flowers all over the country. But that was a very different scenario at that point of time. 

 

Tell us about the first problem that you were trying to solve as you were trying to grow. Was it building the back-end linkages or like for example, the farms? 

There were two problems. First was the procurement of flowers because there was no organised mandi or flower market where one can go and buy. One has to have a direct link with the growers in different parts of the country. And to be able to get the flowers from them, you had to kind of give them a minimum guarantee. And the minimum guarantee can only be given unless you are able to sell a certain quantity. So we are unable to promise the quantity and to go and buy directly from the grower was the most difficult proposition. Which is why, the first and foremost challenge was to increase my sales or increase my shops, so that I am able to consume a larger quantity, so that I can get flowers at a cheaper rate from the growers directly. That was the first and the biggest challenge. 

Once those flowers started coming in, I also realised that why not start wholesaling flowers because there are no wholesalers in the market. And now if, say, for example, I get 100 flowers in a day, if I'm able to consume 30-40, I started selling those 60 flowers to other florists who probably were facing the same problem. So this adversity or this problem gave birth to an opportunity, which ultimately made the retail sustainable. 

 

And what is that mix today? 

Today it is completely different. We do not wholesale anymore. Now we have flower markets, wholesale markets in all major cities of the country. Flowers are growing very methodically and there's a beautiful supply chain which works nicely. So things are very organised and very different now. It is like you go and procure whatever you want from the mandi in the morning, 10 flowers or 20 flowers of whatever colour. So there is no compulsion now. 

 

So to go back to the transition, suppose you were to take, let us say, 100 flowers or 100 units of flowers, where would they come from earlier? And you said that you had to go to the mandi –it was a little random– versus where flowers come from today?

Flowers even at that point of time and now flower cultivation is good only where the weather is uniform. In extreme weather, all flowers can't sustain. For example, northern India is not suitable for growing flowers around the year. It's only suitable for flowers, which can be grown in winter. Or Kashmir, where flowers can only grow at a certain period of time. It is only Mumbai, Pune and Bengaluru that was the region which has always been the flower supplying region of the country. So even today, most of the floriculture farms which are large, organised, are in that belt, as the cost is lower, because you have to pay less to manipulate the weather.

 

So most of your flowers that you are, let us say, supplying in northern India are really coming to you or being trucked from western region or southern region?

Not trucked. They are all flown everyday from those two regions. Yes. 

 

Can you give us a rough sense of the tonnage? I mean, how tonnage or hundreds of kilograms, how many flowers are going in which direction on a normal day? 

It is a difficult question because I'm not into wholesaling and I'm neither growing flowers. 

 

This is about your own consumption, what is coming into your system?

We consume close to 5-7 lakh stems a day. 

 

Where would the majority of those five lakh stems come from? 

It's a very difficult, different mix. Some of them are imported, they come from Thailand. Orchids grow there naturally. Some flowers come from China, some flowers come from the Southern part of India, some come from Western part of India. So I cannot proportionately tell you which flower comes from which area and what percentage, but it is widely spread. 

 

But I am assuming that flowers are coming from Thailand and China. It is not an electronics product where you're looking for a cheaper substitute, but this, I'm assuming, is a higher cost substitute in some ways because it's the value of that Orchid that obviously has aspiration in the eyes of the customer. 

What has happened is flowers are grown artificially or in polyhouses with extra cost and there are some flowers which grow naturally in certain parts of the world. So wherever the weather is conducive and the artificial or the mechanical process is less, that's where the flowers are cheaper, and that's where it makes sense for flowers to be flown in from. So now, Thailand is the hub for orchids because of the weather and because of the cultivating habits. It's the age-old flower which belongs to Thailand. So any country, whichever country, does whatever, they cannot beat Thailand in terms of the variety and the cost and the quantity. Similarly, there are certain flowers which grow beautifully in Kunming in China. Now, Kunming is like heaven on earth in terms of weather. Those flowers cannot grow anywhere in that quantity, at that price. So it is all region wise because of the climate and the cultivating habit which has been there for years. 

 

Orchid is obviously something that people here maybe have aspired more for in the last decade or two as opposed to before. This is a question. 

Yes, if you look at 30 years back, people won't even know what an orchid is all about. Today, orchids are a common flower. An orchid grown in Thailand is just one type of orchid. Now, if you go in detail, there are hundred different types of orchids which grow all over the world. 

 

Let us talk about the ecommerce. At what point did you switch to ecommerce and how did that become an opportunity or an option? Again, given the potential risks of perishability and so on? 

We were the very early entrants. I realised that I have to be a florist to the world. I have to be the shop where anybody can shop from anywhere. And that was only possible online and it was emerging as a phenomenon to order online. In 2001, almost 22 years back when we started our FNP.com, what used to happen was that a lot of people would come to our shop and say that I have my brother staying in Chennai. Can you have it sent? How do I send it to Chennai because I do not have an outlet in Chennai. Either I have a partner, who I can send orders  to and he will deliver. Then the reliability was poor, you get complaints and everything. So I think initially it was started more for convenience, so that there can be cross city transactions and people can access us from anywhere. Ultimately it became big business.

 

Which is your largest city by value right now? 

Delhi, followed by Mumbai and Bengaluru.

 

When you started e-commerce, how did you start putting the various building blocks together? One is of course the sourcing of material which you were already doing but anticipating demand or responding to demand. So did it go as I am assuming it did not go as smoothly because these things never do? But tell us about how that journey was. 

Initially when I started it was one desktop and one person. That is how the online business was started. We used to get 3-5 orders a day and we used to feel as if order was coming from heaven. We do not even know the person and order is coming on the screen. So that was the initial start. But then of course we kept learning and realising the demand. And since we were already franchising, we already had close to 20-30 shops in different cities in India at that point of time and we tried to build a larger network of good florists across the country who could be a delivery partner. So I think the first three years went into aligning the delivery partners and adding more and more pin codes and cities so that we can deliver comfortably. 

The biggest problem with the flower business was that the flower business was a business which had a trust deficit. All the florists, if you trust them to send flowers, they will probably send the flowers which are old and about to die, not the fresh ones. So people always feel that unless you go and choose your flowers yourself in a flower shop, the flowers sent will be old and will probably not survive. So that was the headwind, making people trust a florist to deliver. And that was one problem. 

The second problem was the network that you are able to deliver in many places. So the first three years went into developing that network, making sure that I deliver better than if you go and choose yourself. So that confidence started building in and then it was a gradual process. 

 

And at most of these times you never had a competitor, I would imagine. 

Yes, luckily even today we have competitors independently, colony wise or maybe smaller city wise, but on a pan India basis, even after 30 years, we are the only one.

 

At one level, considering that so much capital has flown into so many ecommerce businesses, you could have, I'm assuming, also raised or did you not deliberately do that or did you try and maybe not get the capital that you wanted at least some years ago?

When I started this business, all this startup and Private equity (PE) , all these words were not existing. People used to do their own resources, take money from here and there and start their business. It wasn't an organised supply of money. So that option was not there when I started. And what happened was that in the first seven years, by the time I broke even, I was already in debt. So now serving debt is a pain. It took me 3-4 years to get rid of that debt, to become debt free and start making money. I have always been a very orthodox kind of a businessman who realised that debt is a pain. So do not take out a loan, do not take cheap finance to fuel your this thing. Whatever you earn, keep flowing back. So I started making money. FNP had become a brand. We were doing very well. I had 6-7 verticals running. But if you ask Vikaas Gutgutia  personally, I didn't even have a flat. Because I invested every penny of what I earned back into the business to grow the business. And at one point of time when people realised that it has become a feasible big company with no debt and no private equity and nothing, and it is a profitable company year after year. That is the fruit I am reaping because of that hard work of 15-20 years where every single penny earned was invested back in the business.

 

So you have never raised capital? 

We raised it last year. 

 

What prompted that? 

My dream was always to have an IPO (Initial Public Offering). I always wanted from the childhood, everybody has some dream. So I thought that let the company be traded in the share market and the speculative value and the valuation of the company, there was a strong desire to go public. So then we decided that, okay, we are worthy of going public, let us hire a couple of bankers and advisors and see how we can take it further. There was a time when a lot of advisors advised us that why don't you lock the value of the company once by investing, by diluting a small bit so that your valuation will be established? And then you take some money, spend money on branding or maybe expansion, so that since it is a growing business and a successful business, in two years time you multiply further and then go for IPO. So it was a stopgap arrangement before the sprint/

 

Yeah, actually, that was my question. Did you do a pre IPO raise as opposed to the IPO itself? 

Yeah, you can say that kind of a thing. Yes. 

 

Tech is an important part of any ecommerce venture. So how did you build your tech and all this while obviously using internal accruals? Because many other companies who have been in ecommerce, even smaller versions, have invested a lot—obviously in people. There are a lot of incentives, there are attractive ESOPs and so on. And you seem to have done it without all of that. 

First of all, tech has always been the big priority. I always realised that tech wise, you  have to be ahead of others to be able to sustain the passage of time. Initially we used to outsource and get it looked after by an outside agency. Then I think 2007-08, we hired a tech head and we built our own tech team. And then onwards, we have been investing whatever is required from our own accruals. 

 

Tell us about what is the consumption and consumer behaviour that you're dealing with on two or three different levels. I think one is on a normal day, which is off season, or I don't know what is off season for you, but I'd love to know. Second is, for example, the big seasons, like a wedding season or New Year's and so on. So those spikes I could understand, but what happens on a normal day? 

See, 5-7 lakh stems is a normal day situation. Now, on an occasion or a heavy day, of course things are different. And now, for the last maybe 7-8 years, we do not look at flowers as a commodity any further. We have become a proper gifting company where we have more than 30,000 gifts from flowers to cake to chocolates to plants to personalised gifts. We are in different geographies, we are overseas in a few countries, we are delivering all over the world. So the whole game has become of a different dimension where flowers are not the talking point anymore. Of course flower remains the most relevant, but we are talking like a proper gifting solution company now.

 

Someone who goes to your website, even if you buy flowers, you are offered chocolates and cakes and so on and so forth, which you can add and sell. But the thing that struck me as at least is how does all that come together? Because a florist is obviously an independent entity from a chocolate maker, from, let us say, whatever, a cake maker versus a chocolate supplier and so on. 

That is the reason initially when we were building this particular category, we used to outsource, we used to have tie ups with cake shops all across the country and we used to deliver through third parties. We realised that cake is becoming big and we opened our own cake brand called 

FNP Cakes and we have 170 shops today all across the country and we deliver through our own outlets. So now the quality is under control, the retail brand is prospering and similarly we are adding white labels now in chocolates and other things where we feel that demand is there and the quantities are there. So we will keep doing that for all other categories also in the coming times

 

What are the big spikes right now in India? When is it that demand really shoots up? 

I think the wedding season is the biggest trigger, which is November to February. November to February is winter. There are festivals, weddings, and that is the celebration time in this country. So that's the peak period for us. And the peak period starts with diwali, which is the beginning of the wedding season, and valentine's, which is very big for us, which is probably the end of the wedding season. So between diwali and valentine's day, we have our busiest period. And then of course, rakhi, mother's day, father's day, smaller occasions, they keep coming around the year. 

 

So would you say now that with obviously so many years behind you, you have a fair sense of how demand will move on (a) a normal day and (b) these sort of big wedding seasons or other big celebratory occasions? 

Yeah, without blinking my eye, I can tell you immediately that after ten days on this day, what will happen. So that is the experience and that is the kind of journey we have been through. So it is all very clearly defined now. 

 

Just to come back to the unit economics part, how has that been changing as you have brought in delivery, as you have combined more gifts into the package, so to speak? And how is the cost of delivery working out versus, let us say, what people are willing to pay for the whole thing. 

Inflation has definitely affected us because inflation has increased the cost of ingredients and inputs which go into delivering a gift. And that definitely has its impact on the profitability unless we increase the price, which we have not.

Second, I think the demand and the requirements of society, and especially with the Gen Z coming in, is changing every day. It is very dynamic. So one has to foresee what is going to be the next thing in demand and how to be ready with that particular product at what price range. 

So I think a marketing team is doing an excellent job where we are able to foresee what is going to happen in the coming times and how to counter the inflation. I think the most important part is that we have always been very extremely careful about that we have to make money every month, so we accordingly adjust our costs. Costs are cut. We try to reduce a lot of things which we probably do otherwise in a good month, so we manage somehow. But profitability is the most important part as a businessman for me.

 

You talked about being able to predict what is going to happen ten days down the line, which I am sure is the case today. But tell me about an occasion where you have been completely caught by surprise.

I think it was Covid time. We thought that it was a bad time and at the time of rakhi in 2020. We did not know what to do. Orders were flying like, I mean, we are unable to track the orders. That kind of a mad rush. And during rakhi, during Covid there are so many restrictions with people being scared of delivery. And the whole team of 500 people working round the clock and everybody from myself to every junior staff in the office is packing rakhis and trying to create a dispatch. That was something which I will never forget. When it pours, it pours like mad. We were praying to God, let's stop, let us not take any further order. That is a very memorable rakhi for me–Covid Rakhi.

 

Today, you have many verticals under fnp.com. So tell us about the rough sales breakdown in percentage terms if you like and I guess starting with flowers, but I do not know if flowers are your  biggest selling item anymore. 

I will break all the verticals into three different zones. One is of course fnp.com which is our retail online-offline that is the biggest which accounts for almost 60% of our total turnover. 20% is our weddings– decoration, planning, venues– whatever we do under a wedding umbrella. And 20% is the rest of 6-7 verticals. Some of them are startups, some of them are growing. So that is  how I break the whole FNP breakup. 

 

You have attempted some other things including street food which have not worked out and you have also taken away some lessons from what I could understand about the way you structure these companies and in future. So is that something that you are applying now going forward? 

I think that was the biggest lesson of my life. I would not have been successful if I would not have failed doing Chatak Chaat. Chatak Chaat was the name of the venture and it was 2007-08 when things were doing very well. I thought it was time for me to unleash another big opportunity and take it to the next level. And that madness resulted in a complete wash out of,  I can say of, Ferns N Petals. Whatever I had, I ruined, I was in debt and in those four years I learnt a lot. Every day was like going to a school called ‘struggle’ and you come back knowing something better than what it was the day before yesterday. And those four years taught me so much. And when the Chatak Chaat was closed, I started my second journey.  I call it a second journey because I was literally on the footpath. 

I had nothing in 2009-10. In 2010 I started the journey again. But yes, I had my lessons very clearly written in my head about what to do, what not to do, how to do and all those lessons from that nowhere to today in twelve years thanks to the Chatak Chaat—that failure. 

 

And you still did not raise capital at that time, at that point which you could have, I am assuming?

No, I somehow wanted to see… I will give an interesting story. As an entrepreneur, as a businessman, I listen to a lot of people but I am somebody who does not like interference in the decision making. From the very beginning it's been my DNA that if you have a stakeholder or a partner, you have to listen to that person. You have to kind of have that dual responsibility kind of a thing—where one can accuse each other, one can praise each other. So I wanted it to be my way or highway kind of a thing. I didn't have any second person. I was the lone person then, I am the lone person now. Of course, last year we had a very healthy investment and people who invested, I must say I have been very lucky that we got some of them and got them who leave it to you and they trust you completely. 

So it was just because I did not want interference, I did not have anybody kind of partner with me or invest in me or whatever. 

 

And you are saying that's changed now? 

I will not say changed, but I can say now there is a method to the madness. Earlier I was maybe arrogant, maybe I was taking too much risk, sometimes risk which was suicidal. Now I have started calculating those things with my experience, with the knowledge, and whatever I have learned. So yes, I am definitely much more careful now. 

And of course my son has joined me now. I have to listen to him because he is the next gen and he has his own way of looking at things. I have a lot of senior people who have been there with me for 15-16 years, 18 years. My present CEO has been there with me for 25 years. So the whole team is so old, it is like a family. So of course we discuss amongst each other and I have started listening much more now. Yes. 

 

Going back to that street food example. So would one takeaway be maybe the mistake of an early diversification or what's your thought on because you are diversified now to some extent? Or are you, in a way, confident that all of this still fits in, let us say the gifting category or the experience category and so on?

I understand your question and I feel basically two learnings, if I can give you a larger picture. First learning was to stick to your core competence. Food was not my competence, it was more of a desire. If I ask myself why Chatak Chaat, I will say it was just maybe a crazy idea and I wanted to convert this. My why was not clearly defined. So after the Chatak Chaat, whatever I have done in my life has been either flowers, or weddings, or some kind of planning—we have the last journey, which is funeral planning and a couple of other things. So now I try to stick to my core competence. 

And the second lesson I can say is that never buy a car unless you have a good driver in hand. So if you have a good driver, even if you buy not such a good car, one can drive well. But if the driver is not right, the best car in the world will not function. So I think those are the two large lessons which are governing my mind right now. 

 

So as you look ahead the rest of the year we have recovered from Covid and there's an interesting experience that you have already shared. I am assuming things have gone back to pre-Covid levels or maybe even better than that. But how is the next year looking, and what are you doing specifically or generally in this market or at this time? 

To be very honest, we are very optimistic. And as I said, we always look at two years hence, and we start doing our R&D, and all our efforts work two years prior to this thing. And if you ask me honestly, I will say that the real time of the brand is now. I think the initial hard work, all the foundation and the overall positioning is complete. It is the takeoff time now, so we will take off next year onwards, and probably we will have IPOs. And the idea is to become the true global gifting company. 

 

And one last supplemental question which I cannot go without asking you. What is the one flower that you feel conveys emotions the best in India from your experience as someone who's dealt with this for so many years?

I have two answers to this. If you ask me, roses, of course. Nothing like a rose, because that red rose means love. Nothing conveys more than a red rose to an Indian or to, I think, almost anybody. But to me personally, I love anthuriums. Anthurium is a heart shaped flower, which is very beautiful to look at and that is the flower for me.

 

What is  the best selling or the most selling flower on your system now? 

Roses.

 

And I am assuming it is red roses as opposed to other kinds of roses. 

50% red rose, 50% other colours.