Are WS-free florists really more profitable?

[12BucksFor2Dozon]

I can.
...

Well, how does that work, exactly, when you are bound by the WS rules that state that you must fill 100% of the value of an order with only 73% of that given to you??

Stop playing silly semantic games, Bloomz...you know what I meant.

 

[Tom Carlson]

Are wire service free flower shops really more profitable?

I do not want to hear, about OG's stealing our customers, that is competition.

I want to see evidence based on increased net profit. If you are more comfortable using percentages rather than gross numbers pleae do so.

I want to see, hear and understand how WS-free flower shop's operations compare to WS affiliated shops.

Be honest. If you are turning a profit say it, if you are losing money say it (hopefully we can help you turn your business to a net pi).

I really want to know and learn with this thread.

Joe

Are wire service free flower shops really more profitable?

Joe, I don't think all of your questions can be answered with dollaars or percents. If being WS free was the only difference in being or not being profitable, everyone should get out. Stacking Wires In against Wires Out depends on whether the units are equal or un-equal.

I do not want to hear, about OG's stealing our customers, that is competition. It is UNFAIR competition because the OG's are using deceptive practices. Therefore discussing OG's has to be considered in the discussion about WS profitablility. The fear I have is that they are going to destroy the concept. That will be a sad day. I hope the day never comes when consumers can say, "Remember when we could send flowers nationwide in complete confidence and trust?"

I want to see evidence based on increased net profit. If you are more comfortable using percentages rather than gross numbers pleae do so.
Profitability has dropped in my store and I was WS Free. But the reason in my case was sales were dropping [due to competition, whether it be fair or unfair] while my occupancy cost was rising. I've fixed that last Oct when we moved to a better and lower cost location.

Is my profitability now fixed? I cannot tell in just 6 months. When I hear a florist say, "Got out of the WS last month and this month I made a profit!" Come on, there are very few months the same. I wish I could turn loss off that fast or profit on that fast.
With sales down during the years 2000 through 2004, I had non-productive design labor so I should have had them doing incoming wire orders. Said another way, my labor cost in filling incoming WO would have been zero.

I want to see, hear and understand how WS-free flower shop's operations compare to WS affiliated shops. It's all relative to many other factors in each shops. Operations should not be any different. Everytning should operate the same. The difference will be in the acounting

Be honest. If you are turning a profit say it, if you are losing money say it (hopefully we can help you turn your business to a net pi).

Any of us can hire a professional consultant who will attempt to give the tools needed to fix a given business. I am sure "florists" would of greather help than an analysis who just left a "nuts and bolts factory" and from a flower shop will do an analysis of "day care center". The key is, the shop owner knows best what needs to be done and HAS TO DO IT. You can give me a lot of pointers, but I HAVE TO PUT THEM INTO EFFECT.

HERE IS MY ANALYSIS OF BEING WS FREE OR NOT.

If a shop can handle incoming orders without increasing payroll during non-ocassion months, then join.

If a shop can educate their customers about the facts surronding sending orders via the Internet, thereby increasing his wire out sales, then join.

Florists should not walk away from filling wire orders BECAUSE the concept of making it possible for a consumer to express their sentiments hundreds of miles away through the medium of flowers has been and should be the cornerstone of the retail florist business. Being the cornerstone does not mean it has to be a large part of each shop. Just 10-15% is probably a good balance.

The big puzzle to me is when florists accept a 27% cut and refuses to accept a 20% cut.

Another puzzle is why the WS are letting themselves self distruct. Maybe they don't feel needed anymore.

Tom Carlson

 

[RC in Dayton and Cincinnati]

FTD recently outlined trends in the flower business

Key trends in the floral retail market include:

• the increasing role of floral direct marketers, particularly those marketing floral products over the Internet, which has resulted in increased orders for delivery placed through floral direct marketers versus traditional retail florists;

• consumer purchasing of "cash and carry" flowers continues to shift away from traditional retail florists to supermarket and mass merchant retail locations;

• the increasing dependence of traditional retail florists on wire services to provide incoming order volume to offset business lost to Internet, supermarket and mass merchant retailers; and

• the expansion of product offerings by traditional retail florists and direct marketers to include specialty gift items.

Am I the only one that finds it odd that some suggest florists use "cost accounting" as a rationale for filling incoming wire orders?

Don't believe them! It's a trap!

Here's the scenario according to FTD. You fill your excess capacity with your competition's (Ordergatherer's) orders at 50-60-70% on the dollar, while they use your money to create more excess capacity for you so you can fill even more excess capacity for them.


I wonder if I can sell my competitor down the street on cost accounting so I can keep all his vans on the road and all his drivers busy.


RC

 

[RC in Dayton and Cincinnati]

So anyway, my answer to your question is "who knows??"...several newer business owners here on FC (myself, Eric, and good ole Dazeal) say unconditionally that, when you factor EVERYTHING into the mix, that being WS free has been far more profitable then being with the WS, while other, more established florist could not do without it.

I think 12Bucks has made a great point.

There's a whole new generation of florists that don't have the long entrenched love affair with the wire services that the rest of us have. Maybe it's all those donuts we've been fed over the years, I don't know, but we better watch out. These new guys don't have the ball and chain around their ankles. They may show us we can no longer compete being shackled.

Just a thought.

 

[prestonway]

Am I the only one that finds it odd that some suggest florists use "cost accounting" as a rationale for filling incoming wire orders?

Don't believe them! It's a trap!

Randy, you're doing yourself & the industry a dis-service with this type of b.s.

I never realized that cost accounting was created by FTD!

Cost Accounting is part of G.A.A.P. (Generally Accepted Accounting Principles). It is used to make properly thought out business decisions, not decisions based on emotions like when you post in
ALL CAPS

...& this from a guy who gives his designer's a vase, & tells them to fill it as full as you can...with no concern as to specific costs?

Whatever works for you buddy.....

 

[RC in Dayton and Cincinnati]

Prestonway,

Where did I say cost accounting was created by FTD?

and I don't believe I used all caps. All caps usually refers to words being capitalized. What I did was increase font size.

As for doing a dis-service, let the readers decide.

FTD pretty much says it all in their trends in the retail floral market.

Florists are losing business to the same companies they are filling their excess capacity with. The more they fill the more they need to fill because they are funding the companies they are losing their business to. The traditional florists are increasingly becoming more dependent on the wire services to provide incoming order volume to offset business lost by the Ordergatherers.




See ya in the Cayman Islands

RC

 

[Joe Mioux]

o.k. finally some passion is building in this thread.


(side note: I don't receive .com orders because FTD doesn't like me and all TF orders are from flower shops there is an ocassional 800 or flower sent but rare.)


12, tom, toto, randy, have you ever taken a cost accounting class? I don't mean this as an insult, but your comments don't indicate that you have.


Let's change paths a bit. Preston help me here.

EXAMPLE:

flower shop calls an order to you for a dozen roses arranged and delivered.

My posted price in the directory is $50 or $55. Say $50.

My costs include 12 roses 60 cm Freedoms that I at most during the reg season 80 cents per rose, my vase costs $1.50, LL lets splurge 1/2 bunch equals 80 cents total, BB 1/2 bunch again lets splurge $3.00.

Lets add it up. $9.80 for the roses plus $1.50 for the vase plus 80 cents for the LL plus $3.00 for the BB.

My total Cost of Goods Sold is $15.10.

Now I get a TF order at $50.00 not including delivery. I will be paid on 73 percent of that order. Which mean I will receive $36.50.

Now my Variable Costs of this order equals $15.10 and I am receiving $36.50, discounted, in return.

I now have $21.40 left for Gross Profit.

Now go to your percentage of Overhead to Gross Sales -- Fixed Costs-- and contribute that Gross Profit evenly over all your fixed costs.

that $21.40 is contributing to lowering your Fixed Costs as a percentage of Gross Sales.

I know this isn't an easy concept to grasp. But believe me it is correct

------------------------------------------------------------------------

to turn the tides a bit,

I have yet to see the other side give any factual evidence to the contrary.

I mean no malice, hard feelings, or ill-will.

I want this excercise to be educational and informative.

Please keep it this way, thank you

Sincerely
Joe

 

[prestonway]

Florists are losing business to the same companies they are filling their excess capacity with.
RC

All quibbling over semantics aside, I do love these discussions because you do make me think.

I had a hard time poking any wholes in your argument until...how did this "excess capacity" arise in the first place?

I don't think you can blame this so much on the WS! For the most part, it's the big boxes & grocery stores that have cut into the local market share of retail florists. AGREED?

So now they have lost local market share, & are trying to make up for it by filling incoming, which you say is a very bad thing to do.

You even go to the extent of saying in an earlier thread that 98% of shops should drop the WS, and further that Cost Accounting is nothing more than a trap to encourage fillers.

O.K.....they've listened to you Randy. They are now WS-free. Now what?

Did the excess capacity mysteriously disappear?

Did it not get even worse?

O.M.G. now there's NO incoming orders at all, and the designer's have next to nothing to do!

No problem. Just fire all the designer's & do it yourself. At the same time you better cancel your standing orders too, as you certainly don't want an excess capacity of flowers. But the prices just went up because your purchasing volumes went down? Oh well...they're only competing at the local level with the big boxes & grocery stores on price...so...

But hold on! That's it! They're going to use all this "saved WS money" to increase their local market share!

But isn't the loss of the local market the reason for the WS dependancy in the first place? And now suddenly this process of a decreasing local market is suddenly going to reverse itself, just because you have money for advertising & promotion? Don't think so.

Yes, I suppose there is the comfort of 100% non-discounted orders.

But 73% of something is still better than 100% of nothing...at least with my accounting methods.

Yup...see you in the G.C.

 

[Joe Mioux]

PW:

that is a bit more colorful retort than i would have provided but it hits the mark.

PPL please think.

I still haven't seen any examples to the contrary. toto, 12, tom, randy.

John, you added labor, but your labor is fixed on a daily basis. It is to your advantage to maximize your designers time arranging flowers, even if it is an arrangement valued at 73 pct. your costs remain whether your designer is filling an ordr at 100 pct one hour and standing around doing nothing the next hour.

Preston and I have both provided real world numbers of costs and have proven that there is still money left over for Gross Profit.

If there was no money left over for Gross Profit, (I will speak for PW) both Pw and I wouldn't be promoting this aspect of business.

Preston, correct me if I spoke out of turn.

 

[prestonway]

If there was no money left over for Gross Profit, (I will speak for PW) both Pw and I wouldn't be promoting this aspect of business.

Preston, correct me if I spoke out of turn.

Agree with everything you say, except that I'm not necessarily promoting it Joe.

I just want people to do their own analysis with their own cost structure to see if it works for them.

Then they can make their own intelligent business decisions...not based on rhetoric.

The whole attitude of "if I can't make full margin on each & every order, then to heck with it...I'm Rejecting", makes no logical business sense.

Sorry, but the last I looked, Management Consultants & Accountants were making a heck of a lot more than florists. What do they know that most of us don't...NUMBERS.

Maybe I should go back to business consulting?

<<Sigh>>

 

[Joe Mioux]

Agree with everything you say, except that I'm not necessarily promoting it Joe.

I just want people to do their own analysis with their own cost structure to see if it works for them.

Then they can make their own intelligent business decisions...not based on rhetoric.

The whole attitude of "if I can't make full margin on each & every order, then to heck with it...I'm Rejecting", makes no logical business sense.

Sorry, but the last I looked, Management Consultants & Accountants were making a heck of a lot more than florists. What do they know that most of us don't...NUMBERS.

Maybe I should go back to business consulting?

<<Sigh>>

Ok..

and me too.

Do your own numbers. but atleast use an accountant who can advise you whether certain business practices are beneficial or not.

 

[bloomz]

Well, how does that work, exactly, when you are bound by the WS rules that state that you must fill 100% of the value of an order with only 73% of that given to you??

Stop playing silly semantic games, Bloomz...you know what I meant.

There's nothing silly or semantic about it, and it is not a game. I agreed to fill to 100% and receive 73% pay for it, and I do. And I do math very well. Any florist who does not is a discredit to the industry, or a sap who deserves to go out of business.

Maybe I don't get your silly semantic game?

Is there some hidden meaning in your words? Sorry I missed them.

Please explain.

 

[RC in Dayton and Cincinnati]

All quibbling over semantics aside, I do love these discussions because you do make me think.

I had a hard time poking any wholes in your argument until...how did this "excess capacity" arise in the first place?

I don't think you can blame this so much on the WS! For the most part, it's the big boxes & grocery stores that have cut into the local market share of retail florists. AGREED?

So now they have lost local market share, & are trying to make up for it by filling incoming, which you say is a very bad thing to do.

You even go to the extent of saying in an earlier thread that 98% of shops should drop the WS, and further that Cost Accounting is nothing more than a trap to encourage fillers.

O.K.....they've listened to you Randy. They are now WS-free. Now what?

Did the excess capacity mysteriously disappear?

Did it not get even worse?

O.M.G. now there's NO incoming orders at all, and the designer's have next to nothing to do!

No problem. Just fire all the designer's & do it yourself. At the same time you better cancel your standing orders too, as you certainly don't want an excess capacity of flowers. But the prices just went up because your purchasing volumes went down? Oh well...they're only competing at the local level with the big boxes & grocery stores on price...so...

But hold on! That's it! They're going to use all this "saved WS money" to increase their local market share!

But isn't the loss of the local market the reason for the WS dependancy in the first place? And now suddenly this process of a decreasing local market is suddenly going to reverse itself, just because you have money for advertising & promotion? Don't think so.

Yes, I suppose there is the comfort of 100% non-discounted orders.

But 73% of something is still better than 100% of nothing...at least with my accounting methods.

Yup...see you in the G.C.

Florists have lost cash and carry business to the grocery stores. They are losing their gift giving local delivery business to Ordergatherers.

In earlier posts I did say 98% of florists would be better off with no wire service, but I never said Cost Accounting is nothing more than a trap to encourage fillers. I practice and believe in cost accounting (at least as I understand it), but I believe using it as a reason to fill wire orders is a trap for most florists.

Your example is a good one because it illustrates florists who have already fallen into the trap. For many of them there is no hope if they’ve already lost too many of their local customers.

What I’m suggesting is for florists not to fall into the trap. If they want to use cost accounting, use it in a local way where there might be some future benefits of increased local business opposed to marginally contributing to fixed costs for your competitor’s (ordergatherer’s) benefit.

I’ve watched large and small florists alike fall into the trap of filling shrinking revenue with discounted orders. I’ve seen some of the largest florists in the country beg for incoming wire orders to fill their excess capacity. It’s sad because it’s the first stage of a deadly disease, a slow wasting disease that creeps up on its victim. Their excess capacity keeps creeping larger and larger as their core business erodes away, as they subsidize the very companies that are killing their own business.

Very, very sad, isn’t it?



RC

 

[bloomz]

The big puzzle to me is when florists accept a 27% cut and refuses to accept a 20% cut.

Tom Carlson

There's a very simple answer to that puzzle Tom. For me to take many orders with a 27% cut I have to take more with a 20% cut (outgoing) and I will never get that 20% from non-affiliated florists.

I doubt it's that simple with many other florists tho that live for incoming.

But I think you knew that.

 

[Joe Mioux]

. I’ve seen some of the largest florists in the country beg for incoming wire orders to fill their excess capacity. It’s sad because it’s the first stage of a deadly disease, a slow wasting disease that creeps up on its victim. Their excess capacity keeps creeping larger and larger as their core business erodes away, as they subsidize the very companies that are killing their own business.

Very, very sad, isn’t it?



RC

Randy, that is mismanagement. if you have consistent over capacity, then you need to eliminate the excess labor.

Joe

 

[prestonway]

Florists have lost cash and carry business to the grocery stores. They are losing their gift giving local delivery business to Ordergatherers.

In earlier posts I did say 98% of florists would be better off with no wire service, but I never said Cost Accounting is nothing more than a trap to encourage fillers. I practice and believe in cost accounting (at least as I understand it), but I believe using it as a reason to fill wire orders is a trap for most florists.

Your example is a good one because it illustrates florists who have already fallen into the trap. For many of them there is no hope if they’ve already lost too many of their local customers.

What I’m suggesting is for florists not to fall into the trap. If they want to use cost accounting, use it in a local way where there might be some future benefits of increased local business opposed to marginally contributing to fixed costs for your competitor’s (ordergatherer’s) benefit.

I’ve watched large and small florists alike fall into the trap of filling shrinking revenue with discounted orders. I’ve seen some of the largest florists in the country beg for incoming wire orders to fill their excess capacity. It’s sad because it’s the first stage of a deadly disease, a slow wasting disease that creeps up on its victim. Their excess capacity keeps creeping larger and larger as their core business erodes away, as they subsidize the very companies that are killing their own business.

Very, very sad, isn’t it?



RC

Hmmmm...are we talking the floral industry or the automotive industry?

I see a great many comparisons to be made when reading your post.

Sad? Maybe...maybe not.

In the end as in the automotive world, I guess the consumer ultimately decides who will survive...or not.

I can't change the world, & I can't change this industry. All I can control is my role in it. My responsibility begins & ends there.

As such, I've had to change the nature of my business to ensure that my family & staff still have a pay check at the end of the day.

Each of us must do the same, as this industry evolves.

Good luck to you all!

 

[CHR]

Excellent discussion, guys.

Let me give you a real world example of how filling incomings is more than just considering incremental income.

Last Friday, we got an order from 'International Florist' of Vancouver BC for $39.95 total for a spray rose-filled teacup (TF item) to be delivered in our area.

The incremental income (small as it was) was there to make short term financial sense to fill the order. Had it been from a real florist, we would have.

BUT the order was actually sold by e-florist-inc.com who is running pay-per-clicks in Google targeting our city and everyone elses. SO? Well, their ads promise 'free delivery' and 'free vase' - both of which are lies.

Our store would show up two or three times on those same Google pages but we can't and won't use powerful lies to lure in shoppers and we certainly are not going to help those guys compete unfairly against us.

They and other OGs also use inflated bogus prices to show mark-downs.

Should I have just taken that order for the few dollars it would have brought us on Friday and helped feed the machine that serves to undermine our company?

 

[MANORVILLE]

"o.k. finally some passion is building in this thread".
Jou Mioux



ManorMan

 

[12BucksFor2Dozon]

So, in review (although I hardly know why I bother)...

...

You want numbers?? Every order that we filled was at 100% of retail value...can you say the same?

I can.

And I think I would bet money that Joe can too.

Anyone who has half a brain and cares about their business can.
...

Well, how does that work, exactly, when you are bound by the WS rules that state that you must fill 100% of the value of an order with only 73% of that given to you??
...

There's nothing silly or semantic about it, and it is not a game. I agreed to fill to 100% and receive 73% pay for it, and I do. And I do math very well. ...

So Mr. Bloomz, you catagorically state in post #78453 that you, "with half a brain", fill every order and get 100% of the value of it, but then, in post #78494, you contradict yourself TOTALLY and say you "fill 100% and receive 73% for it".

Huh? Maybe it time to start using that other half of your brain...

 

[RC in Dayton and Cincinnati]

Randy, that is mismanagement. if you have consistent over capacity, then you need to eliminate the excess labor.

Joe

Oh, I see Joe,

Accept incoming wire orders during the slow summer months, but reject during all holidays.

I like that plan!