Floral Management

[Frank]

Stormy, What say you!

I would love to get Stormy to chime in on this debate. From what I can tell, he is a very successful florist who handles lots of incoming wire orders profitably.

 

[CHR]

Just received our copy of Floral Management today. I'd completely overlooked the sidebar story called "More Costs to Consider." Both Chris Drummond of Plaza Flowers and Kathy Dudley of Bloomery address higher costs in both filling and selling wire orders.

Chris figures incoming design labor at 12% (instead of the usual 10% on local orders) because there are so many 'onsies' (which zap productivity). He also urges florists to include the 'receiving fees' ($1.25/order) in Net Contribution analysis.

Kathy talks about extra labor time it takes to place orders with other florists. (I'm assuming most would be custom or specialty designs rather than WS top sellers.)

Both make good points about recognizing all the expenses in selling and filling.

 

[SpringCity]

In summary, when we are reading WS-related threads, readers should try to dintinguish facts from opinions, and profitability analyses from business strategies. Once we are clear on that distinction, WS debates are not that painful to read.

yeah I wish I could just see a chart or something but everyone would argue that some of the numbers on the chart shouldn't be there or are inaccurate, or something.

 

[LJVF]

There is a certain niche that can make the wire services as a whole work for them. For large volume senders it's a no brainer. For others, it can be tricky, and perhaps more trouble than it's worth, but it can be profitable if monitored and handled properly. For the rest, it's a sinking ship. Most will fit into one of these three categories and view it from completely different angles.

If one would just put themselves in the other's shoes, there would be more understanding and less debate.

 

[CHR]

For others, it can be tricky, and perhaps more trouble than it's worth, but it can be profitable if monitored and handled properly.

Something to ponder... why is 1-800 closing LFCs? If they were profitable and delivered great quality, 1-800 would be opening more. No?

Could they have realized that need florists who have their own 100% paying customers to be able to absorb all the fees and still stay in business? Or maybe they can just earn more $ on the Bloomnet side if they spread the incomings around? :>

 

[LJVF]

Something to ponder... why is 1-800 closing LFCs? If they were profitable and delivered great quality, 1-800 would be opening more. No?

Could they have realized that need florists who have their own 100% paying customers to be able to absorb all the fees and still stay in business? Or maybe they can just earn more $ on the Bloomnet side if they spread the incomings around? :>

I agree with what you are saying, the LFC business model in it's current state just can't work. But I look at WS as a supplement. A business cannot rely on WS alone to be profitable (OG's are the exception).

 

[bloomz]

Ha ha Bloomz,

The joke may be on you because I have yet to meet a florist who didn't claim the same as you, but the numbers don't add up that way.

I know how much money I'm being compensated on every single wire order I send, and I know FTD makes a profit on them as well, and I know there is not much left over for the filling florist.


RC

You mean - you're taking advantage of all those poor filling florists???

urpleteaurpleteaurpletea

I also know how much I am being compensated on sending orders. That also gives me even more room to fill incoming, so...

I guess I'll just keep laughing my way to the bank.

But I still could use more incoming so I'd have to go there more often.

This service is getting expensive but it's hard to drive when you're like this :rofl::rofl::rofl::rofl::rofl:

Is there anyone here besides RC that couldn't easily and cheaply fill another 4 or 5 orders a day?

I know we could.

That said - I forwarded a jf order again this morning..... $70 for a dozen red roses.

Why didn't we take it? Didn't feel like it. :headbang:

 

[BOSS]

Chris figures incoming design labor at 12% (instead of the usual 10% on local orders) because there are so many 'onsies' (which zap productivity). He also urges florists to include the 'receiving fees' ($1.25/order) in Net Contribution analysis.

IMHO... 10% and even 12% labor is unrealistic in today's world! I'm not even sure that 20% is fair....to me!

 

[Bouquet Corral]

I Think you are right.
I tok one of our Statement and calculate the Fees and Listing Cost and Membership and Order Send and Received. I felt really Really sad i felt like i was Peeling an Onion and Start crying. Wire Service are not our Bread and Butter i thought so but no ....
Yes the Florist(OG or Tel, FTD ) that send us the Order gets 20% for relaying the order to us . There are no Florist sending Orders anymore the are OG's and Wire Service.
An Order of the Value of $ 100.00 minus 20% is 80.00 minus 7% Clearinghouse Fee is $ 5.60 minus FTO $ 1.25 is 73.15 and minus Delivery $ 10.00 product is 63.15 that is not all it depents how many orders you get you have the Monthly fee of
$200-$300 to belong to the Wire Service . ...... We quit FTD just last week and today the Rep came by to tell us about the New CEO of FTD i told here get out of the Store. We are done done done ......... We need a Floral Revolution and all the Orders we Receive lately are 30-40 dollars average how can you make any money.
We need to go indepentend. We need a Floral Union The a Florist on the Board of Director. We need to stand untied as one Front but that will not happen.
Anyway we are like the Israelite that worked in Egypt to built somebodyelses Kingdom.

 

[Joe Mioux]

Maintenance:...ooooh that's a tuffy....no pun intended...Lets say $1.00/delivery...running total $27.02....leaving a gross profit of $12.78 for the 4 deliveries...minus of course, overhead, my salary and whatever else...

Please shoot holes in this "theory"... I'm looking to "adjust" some stuff in August....

I think you need to contract out your deliveries.

 

[RC in Dayton and Cincinnati]

Also Goldfish,

How is it that filling wire orders can be profitable for your shop but unprofitable for my shop, assuming I purchase better and operate more efficiently?


RC

You answered it by yourself already. You are operating more efficiently than we are, that's why.

You don't have as much "excess production capacity" (euphemism for "idle labor" i.e., "a designer who is picking noses while sweeping floor") as we do.

If you have idle labor, any order is "profitable", or better than doing nothing - let's put it that way.

Goldfish,

Are you saying I have to become inefficient to make a profit on incoming wire orders?

 

[BOSS]

I think you need to contract out your deliveries.

Your probably right...Um....maybe....you think so?....ah....where the heck did I lose control....maybe I could.....or maybe you should......Ugh...

One thought that came to me about this this morning... the scenario was based on 4 incoming orders...MY bad that I neglected to remove the 27% sending the equation into a tail spin...

But...regular local customer or direct consumer sales, that generate deliveries throw another wrench into the mix...lets say 30 deliveries a day, 20/$9.95 and 5/$12.95 and 5/$14.95...comes to $338.50 for the day...(pretty average)...then at holidays...how about 100/day...

I'm so confused

 

[Connie]

I'm so confused

Welcome to my world!

 

[SpringCity]

I've worked for people who take 20% off the top on incoming wire orders, nice for the customer...not!

 

[Joe Mioux]

Your probably right...Um....maybe....you think so?....ah....where the heck did I lose control....maybe I could.....or maybe you should......Ugh...

One thought that came to me about this this morning... the scenario was based on 4 incoming orders...MY bad that I neglected to remove the 27% sending the equation into a tail spin...

But...regular local customer or direct consumer sales, that generate deliveries throw another wrench into the mix...lets say 30 deliveries a day, 20/$9.95 and 5/$12.95 and 5/$14.95...comes to $338.50 for the day...(pretty average)...then at holidays...how about 100/day...

I'm so confused

wouldn't it be easier, add up all your delivery income on a monthly/yearly basis and then subtract out all the monthly/yearly delivery expenses.

take that number and divide by the number of monthly/yearly deliveries?

yea, some deliveries will be money losers while others will be net gainers.

Fixed and variable costs can be stripped out of these monthly/yearly figures pretty easy.

I looked at that article, briefly last night and it appears that Goodman was trying to make a comparison of how much Gross Profit Margin would Contribute to Fixed Costs between local and incoming wires. Since, delivery expenses are the same between local and incoming, I would thinkg that he was attempting to keep the analysis simple and that is why he left out delivery expenses.

joe

 

[BOSS]

Yea Joe, it probably would be easier... I was doing it off the top of my head...guess the gray (hair not matter) is a little rusty

I'm sure he left off delivery for that very reason too, but it's a necessary component to costing....

 

[goldfish]

Are you saying I have to become inefficient to make a profit on incoming wire orders?

Paradoxically, yes, in my opinion. Obviously, it doesn't mean that you should become operationally inefficient by hiring 10 extra designers who do nothing most of the day. The net effect would be quite negative.

It simply means that most small florists like us do carry a huge burden of those "mostly-do-nothing" designers whom, for one reason or the other, cannot be cut. Under this condition, incoming orders or any other cheap, discounted orders will add some profit.

Now as a business strategy, it's a whole different matter. I do believe that chasing after incoming orders is a short-sighted strategy, which won't work in a long run.

My personal opinion is that there is a healthy level of wire-in orders relative to the total revenue. For most small florists, it should be about 10-15% (less is better).

 

[goldfish]

I've worked for people who take 20% off the top on incoming wire orders, nice for the customer...not!

I bet that shop will disappear, if not already.

 

[SpringCity]

I bet that shop will disappear, if not already.

well he sold it at a loss, so yep.

 

[RC in Dayton and Cincinnati]

Paradoxically, yes, in my opinion. Obviously, it doesn't mean that you should become operationally inefficient by hiring 10 extra designers who do nothing most of the day. The net effect would be quite negative.

It simply means that most small florists like us do carry a huge burden of those "mostly-do-nothing" designers whom, for one reason or the other, cannot be cut. Under this condition, incoming orders or any other cheap, discounted orders will add some profit.

Now as a business strategy, it's a whole different matter. I do believe that chasing after incoming orders is a short-sighted strategy, which won't work in a long run.

My personal opinion is that there is a healthy level of wire-in orders relative to the total revenue. For most small florists, it should be about 10-15% (less is better).

Goldfish,

You aren't making a profit on those incoming wire orders. You're simply cutting your losses on your inefficiencies. If those orders were truly profitable the more you handled the more profit you should make, and the more efficient you operated the higher the return should be. But, as you stated that's not the case.

Also, to make sweeping statements like "...there is a healthy level of wire-in orders relative to the total revenue. For most small florists, it should be about 10-15%..." is ridiculous. For example, A florist doing $100,000 in sales you advise $10,000 should be wire ins. That's less than 14 orders a month. If monthly wire service membership is $300 that's over $20 an order before the discounting even starts.

This is the way I see it for the small florist. Handling too many incoming wire orders is detrimental and handling too few is too costly, and the line between too many and too few overlap leaving no place between detrimental and too costly.

Now of course these are my opinions, and feel free to discount them if you like as I have no vested interest in the well being in anyones business other than my own.


RC