Bloomnet Premier - Revisited

[PhillyPhlorist]

Starting this thread as the other threads have become quite lengthy and Bloomnet reps are on FULL THROTTLE right now to get new members signed on before the holidays. (very active in the Philly area for all you FC'ers out there in this area...)

For those considering adding $50k or more of "Premier" Bloomnet biz to your biz, please consider the following:

Per a meeting with the rep in my area (a VERY nice guy BTW) I got a very good sales pitch about covering just ONE zip for Philly - my zip.

Here are the numbers, you decide if I should sign on:

Premier 6 level. $50K of biz GUARANTEED. (err, the Guarantee part is kinda foggy...)
Doing the math, that's 860 orders annually, avg. 71 orders per month including holidays, with avg. order value (per him) is $58.11.

OK - using just 50 orders for this demo, at $58.11 per order = $2905.50 in Gross Order Dollars.

$2905 Gross
- 843 for 29% comm. Paid
= $2062
- $250 Premier fee
- 70 Bloomnet fee
- 10 Directory fee
- 88 Order Trans. Fee ($1.75 ea.)
= $1644
- $581 20% labor
- $872 30 % COGS on 2905.50
- $213 Cost of delivery for 50 orders (my cost is $4.25/del. incl. use of delivery pool)

= $-22.00 (loss)

KEEP IN MIND there are NO other benefits associated with Bloomnet membership in this example.

- Herb

PS - more in next post.

 

[PhillyPhlorist]

What about the BLM Fulfillment centers?

Fulfillment centers are a bygone model.

This is where those $50k and up Guarantees are coming from...

Some of you know Keith from All Occasions here in Philly. He operated a SLICK & well run Bloomnet fulfillment center - up until 800 pulled the plug. He went from doing TONS of biz to virtually none. Time will tell what happens to his business, but this is an example of how putting all your eggys in one basket can bite you on the arse.

Keith is a GREAT guy - good florist. However, in TOTALLY my opinion he put too much into 800 and the slick deals they use. He did not leave a cushion of protection for his biz. I sincerely hope he is able to continue running, and being one of Philly's finest shops.

"WHY ARE YOU TELLING THIS, HERB?" you ask?

Because, I do not want any other professional florist to lose their shirt with this wire service. In the past, I have been literally promised the sky with dealings with Bloomnet/800. And, promises continue as recently as this week. I do not trust them. Yes, they have some GOOD people in the industry working for them, but it all ends up at the top. Those good people are governed by the 800 top brass. THAT is where one must really analyze the trust factor - at the top.

Just watch your numbers, that's all. Don't let yourself get too wrapped up in any one wire service model.

YOUR CUSTOMERS COME FIRST! Never forget that.

- Herb

(stepping off soap box now...)

 

[LJVF]

Yes they are on full throttle, making new offers and numerous visits, but I turned them down.

A couple of positives that may make a difference in cogs:

They promised me all the guaranteed incoming for ONE zip code.
They creatively found a way to drop some of the fees
The rebates are negotiable (off the record)

The negative, and it's a HUGE one:

They don't promise how evenly these orders will be distributed, so I've come to the conclusion that premier florists will get bombarded on VDay and MDay. So the bulk of the promised revenue will come during peak periods which will have a greater impact on cogs. What a rip.

 

[MANORVILLE]

Herb

Thanks I'm gonna have to become a premier shop so I can lose more money ! ROTFLMAO !

What's the deal on the rest of the levels ?
Curious as 71 orders a month doesn't even qualify to catch my attention.
Start talking 300 to 500 more and I'll at listen, Maybe !!! Then again maybe not !

 

[goldfish]

They don't promise how evenly these orders will be distributed, so I've come to the conclusion that premier florists will get bombarded on VDay and MDay.

Very good point.

As we've discussed thousands times in the past, profitability of incoming orders solely depends on the excess production capacity.

Wire-ins can be profitable when you have idle labor (i.e., designers who have nothing to do). In that case, extra work required to fill incoming orders won't incur any extra labor cost, thus elevating the gross profit margin.

During busy seasons (VDay, MDay), however, incoming orders will incur labor cost, although it's not as high as the average labor cost during non-holiday seasons.

This kind of deal (guaranteed incoming orders) makes sense, only if you get a large number of incoming orders during summer, not during busy holidays.

 

[TOTO]

Nice job running the numbers Herb!

Just goes to prove our point all the time that, there's NO MONEY in filling floral order gatherer's orders.

Cutting to your quick, and since your COSTS for filling those 50 orders amounts to $2,927.00 for which you are getting $2,905.00, results in a net loss to you of (-$22.00)

In other words, each order for $58.11 costs you $58.54 to fill then.

And florists wonder why, they aren't making any money, especially when they seem to be SO BUSY, and even more so during the Holiday times when, they really can't handle the extra work.

Good job runing the numbers Herb. Let's hope you saved a FEW FLORISTS from making another big mistake.

As they say, it's not what you make that counts, it's what you get to keep!

 

[bloomz]

If you can do that without extra labor the picture changes.

But cost of delivery from my perspective seems about half of what I have figured mine to be.

 

[CHR]

Herb, thanks for the post.

Your take on the deal echos that of a friend who recently dropped BloomNet after many years of being one of their top fillers.

They had survived the threats of 'losing order volume' through refusing the 'you must put 1-800-Flowers logos on your trucks and put our name on your enclosure cards' plan. They weathered the many 'plan changes' and realized that 1-800 represented 20% of their everyday business but blew up to about 50% on holiday orders.

When discounted sales suck up 50% of 'prime time', your margins for those all-important holidays are ridiculously low and your local customers - with cash in hand - have to a take back seat.

Math is a wonderfully liberating thing and can open eyes to where the real opportunities are.

It's why the "smart florists" really just want to send (and not fill too many incomings) on holidays.

 

[PhillyPhlorist]

If you can do that without extra labor the picture changes.

But cost of delivery from my perspective seems about half of what I have figured mine to be.

I factor in my usage of our Delivery pool
This number is for our LOCAL delivery area (just zips & suburban towns around shop's zip.

Herb, thanks for the post.

Your take on the deal echos that of a friend who recently dropped BloomNet after many years of being one of their top fillers.

They had survived the threats of 'losing order volume' through refusing the 'you must put 1-800-Flowers logos on your trucks and put our name on your enclosure cards' plan. They weathered the many 'plan changes' and realized that 1-800 represented 20% of their everyday business but blew up to about 50% on holiday orders.

When discounted sales suck up 50% of 'prime time', your margins for those all-important holidays are ridiculously low and your local customers - with cash in hand - have to a take back seat.

Math is a wonderfully liberating thing and can open eyes to where the real opportunities are.

It's why the "smart florists" really just want to send (and not fill too many incomings) on holidays.

Exacto-mundo! We FINALLY saw the "light" when all 4 of our lines were ringing constantly at MD, and we had stopped taking LOCAL REAL CUSTOMER orders SO THAT WE COULD GET CAUGHT UP on the krappy 800 flood of orders that came in that Friday night before!
(talk about thick headed, we were...going thru life with blinders on...)

The numbers do not lie. Nor, in my example, are they skewed. Real, honest figures.

I will admit, before RE-running the numbers I posted, I was SERIOUSLY tempted to just cover my zip and see what happened.

I WILL SAY...that if the fees were not what they were, it MAY be a profitable situation. But, by how much???

- H.

 

[BOSS]

Refuse on!!! I always say

 

[spentflowers]

Something else you need to factor in, and this is on the QT from a BloomNet rep:
" ...factor in that he HAS to buy ALL 800FL codified products and the Harry London Chocolate, and factor in the cost of each container into his costs. Also, if he doesn't send 20 orders out a month, he will get whacked with the low send fee. Lastly, he will also pay membership dues for shop to shop orders also, and if he is a new signup, will have to shell out $300 for their mandatory selection guide.

The Phil. area Premier Guy, told me that he was making each premier buy the Bar 3 Harry London -- $1000 worth of choc., but only two items are codified!"

The pressure on the MACS and Premier Reps to sell this Premier program is great. But I also wonder, what about the loyal BloomNet members in this same zip code who have bought into a lot of the codified products/choc./selection guides etc. and will now lose a lot of the incoming business because of the new Premier Shop signed up ? It never ends does it ????

Shops beware !

 

[BOSS]

Something to think on too.... why are they pressuring **every** member to become a Premiere Shop when they ***know*** many are not of the quality or size necessary to accomplish the volume necessary to make the program possible?

(yes it is a rhetorical question)