More innovators get swallowed
Today's news confirms one of our basic principles: that innovative small companies eventually get bought out by bigger companies that have great trouble internally coming up with new approaches. Once a small company has proven the success of its approach, a larger company comes in to exploit that advantage over a wide front. Bets of all, the concepts have been proven and the cost is generally low.
Scotts buys Smith & Hawken
Lawn care giant Scotts has announced it will acquire specialty garden chain Smith & Hawken. That company, which sells high-end garden tools and teak furniture, will complement the more mundane products that Scotts distributes products like grass seed, awn fertilizer TurfBuilder, and Ortho lawn chemicals.
Smith & Hawken has built a solid catalog business and has 56 stores across the US. Scotts plans to expand the products into big-box retailers like Home Depot and Lowe's. Using its distribution savvy, it plans to capitalize on the upscale Smith & Hawken brand. Analysts are concerned that they will dilute the brand, taking away its cachet.
Smith & Hawken, once touted as a great entrepreneurial start-up, has been owned for five years by a private equity company, DDJ Capital management.
FedEx buys Parcel Direct
FedEx continues is expansion into covering the delivery business by buying Parcel Direct, a division of Quad/Graphics, a Wisconsin-based commercial printer. Package Direct has developed a special niche in the delivery business, called shipment consolidation. It serves companies that have numerous small packages to deliver and where speed is not a big issue. It collects shipments at a dozen regional centers, then sends them locally via the U.S. Postal Service. Quad/Graphics invented the services to help out the publishers of mail order catalogs, and area where it has many clients.
FedEx is planning to use the service to complement its regular, more expensive high-speed, high-cost package delivery services, both FedEx Air and recently growing FedEx Ground. It gets them solidly in with a number of online and catalog retail companies that otherwise they might have missed. Company spokesmen spoke of the advantage of buying a proven idea and an already established network.
This deal follows the recent FedEx acquisition of Kinko's.
