FTD clearinghouse fees to 9%?

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CHR

CHR

Design matters
Nov 28, 2002
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Anaheim
www.avantegardens.com
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I recently did some consulting work for a family that is looking to purchase a flower shop - including reviewing P&Ls, Balance Sheet, WS statements and tax records.

Haven't seen an FTD statement in quite a while but was taken aback by the fees.

The store was being assessed a 9% clearinghouse fee, plus a $19.95 unequal sending fee, plus an additional percentage for the unequal sending.

I thought FTD was still at 7%. What triggers the 9%?

This store is also spending $350 on directory listings/ASBs, another $300 for Merc (Wings), $219/mo dues.

I explained to the potential buyers that after all was said and done, despite receiving a check from FTD, the shop had lost nearly $1000 with FTD in just one recent month. (This did not include the $300 for FAH and additional purchases of co-op ads.)

The potential buyers didn't 'get' that the check didn't come close to covering the cost of fulfilling the incomings (COGS, labor, delivery) and saw it as 'profit' until I penciled it all out.

Same with TF. (The store also spends $500/mo in directory/ASBs at TF - basically $10K a year combine to court other florists, but does send out enough to qualify for the rebate there.)

The store has more problems than just WSs (like COGS of 50%) and hasn't made a profit since 2003.

Oh, and if you fall for the line that a business generates lots of unreported cash, I have a bridge to sell you....
 
Didn't the 9% go into effect if you where filling for 800? I thought thats what triggered the change.

Regardles I hope your charging a fee for your priceless consulting cathy!!!

You will save them a ton of money.

PS when you are done can you come over and help me balance my books?
 
CHR said:
The store has more problems than just WSs (like COGS of 50%) and hasn't made a profit since 2003.
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Holy smack! No wonder they have not shown a profit in 4 years...

And I too think the 9% kicks in for 800 fillers....
 
ivygreen said:
Do you think a shop can recover from that?
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It is amazing how shops can recover from mismanagement of money. I managed a shop that was 15 years not making a profit and turned it around in 1 year...just by making changes in how the arrangements were made and formulas used...Not even doing much to the 4 wire services that they were using...If I had known then what I know now..I could have really done great things for that place...
 
Did not ?

FTD and 1800 part their ways, or is 1800 still sending thru FTD?

I'm not even involved, and I can't keep up with all the spinning.

Or is the 9% a penalty to FTD members for belonging or excepting 1800 orders?
 
Jerry said:
Or is the 9% a penalty to FTD members for belonging or excepting 1800 orders?
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BINGO!

800 has their own network, "Bloomnet" that has basically the same coverage as Mercury, but with higher rebates...in *some/many* cases.
 
The shop with the 9% is not a member of Bloomnet. Any other reasons for the 2% penalty?

Can a shop like that turn around?

Maybe. Like Lori said, it will take a lot of work.

If they've been stuffing for a long time (and I think they have), then dialing back the amount of flowers may alienate regular customers - and there aren't that many of them right now as it is.

The lease is up next fall so overhead will likely increase. The fixtures & equipment are nearly 20 years old so they need refurbishing, replacing.

There's plenty of fat to be trimmed (more than 10% of gross is spent on WS directory ads and YP ads) but the volume will need to more than double to make the company viable.

Even with dramatic changes, I told the buyers to not to expect to make a profit for at least a few years. If they have to move the business next year, that timeline will increase substantially.

Eric - Yes, I charge a fee. Armed with all the information (including break-even point analysis), some of the folks for whom I've consulted still plunge ahead - because owning a shop is their dream. Only after pouring through hundreds of thousands of dollars does 'reality' finally hit them. Sad.
 
Jerry said:
FTD and 1800 part their ways, or is 1800 still sending thru FTD?

I'm not even involved, and I can't keep up with all the spinning.

Or is the 9% a penalty to FTD members for belonging or excepting 1800 orders?
Click to expand...


800 does have their own network, but they do also send out through TF and maybe FTD(not sure on this) so the increase may still be from this.
 
Talk about a financial disaster!

CHR said:
I recently did some consulting work for a family that is looking to purchase a flower shop - including reviewing P&Ls, Balance Sheet, WS statements and tax records.

Haven't seen an FTD statement in quite a while but was taken aback by the fees.

The store was being assessed a 9% clearinghouse fee, plus a $19.95 unequal sending fee, plus an additional percentage for the unequal sending.

I thought FTD was still at 7%. What triggers the 9%?

This store is also spending $350 on directory listings/ASBs, another $300 for Merc (Wings), $219/mo dues.

I explained to the potential buyers that after all was said and done, despite receiving a check from FTD, the shop had lost nearly $1000 with FTD in just one recent month. (This did not include the $300 for FAH and additional purchases of co-op ads.)

The potential buyers didn't 'get' that the check didn't come close to covering the cost of fulfilling the incomings (COGS, labor, delivery) and saw it as 'profit' until I penciled it all out.

Same with TF. (The store also spends $500/mo in directory/ASBs at TF - basically $10K a year combine to court other florists, but does send out enough to qualify for the rebate there.)

The store has more problems than just WSs (like COGS of 50%) and hasn't made a profit since 2003.

Oh, and if you fall for the line that a business generates lots of unreported cash, I have a bridge to sell you....
Click to expand...

Last spring, my son decided to purchase a 26' boat. His uncle told him that, owning a boat is like having a hole in the water, into which, the boat owner throws all of their money into. This is his second season and we think he has figured it out by now.

The shop you did some consulting for on behalf of that family will take on the same TITANIC mode unless they are willing to divest themselves of those TWO MAJOR LIABILTIES.

Failing that, the business will continue to FAIL and will never be able to show any profit what so ever.

Bringing down the COGS is easy enough once the folks understand the proper pricing formulas, but the needless overhead of two wires services with redundant fees and those loosing Also served by monthly tariffs is just like that hole in the water, into which, they will be throwing their hard earned money into!
 
There was talk about their FTD advertizing, I can not for the life of me understand why someone would spend hundreds of dollars a month to advertize in the a directory to be able to sell their flowers at a 27%+/- discount. Pay money to sell for less?????????
 
Gilliland said:
There was talk about their FTD advertizing, I can not for the life of me understand why someone would spend hundreds of dollars a month to advertize in the a directory to be able to sell their flowers at a 27%+/- discount. Pay money to sell for less?????????
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Ahhh, its 29 percent :rolleyes:

joe
 
I saw this thread i need to say something on day my wife an i sat down to go through the Statement and we realized that we are not getting 80% not 70 % not even 65% we calculate it with the membership we get 62 % return for every order we fill. that is outrageous we were shocked and we ask our self how in the world do we make money and more and more local customer place orders online. Did you know that we pay $1.25 FTO and Dove Recieving the order and every Internet Order with Teleflora is $2.95. A phone call is cheaper anyway................... that was my 2 Cents :)
 
CHR you have it all wrong

CHR, you have things all wrong. FTD IS ONLY GETTING PAID FOR THE SERVICES THEY PROVIDE.

If a shop is not willing to develop their own marketing plan, then paying a fee to the wire service is reasonable.

If a shop is not willing to develop their own website, then paying a fee for getting the order to them and a higher fee to host is reasonable.

If a shop is not willing to build their own advertising plan, then paying FTD for ads to try to catch easy orders from other florists is reasonable.

If a shop is unwilling to shop for a point of sale technology that is independent of any wire service, then getting killed in fees and being forced to upgrade every four years by a wire service is reasonable.

For way tooo long, it has been possible to lease a store front. Buy a cooler, Join a wire service or two or three. And become a real florist. And if you need something go thru a wire service. Need containers, get them thru the wire service. Need fresh flowers, buy them thru the wire service. And if one day, they wake up and find out that they aren't making any money and getting screwed by paying higher prices for the goods and services they are buying from the wire service. SO WHAT! They took the path of least resistence.

Am I being harsh? You bet ya! WHY? Because you can't save someone from themselves. Start calling the shops randomly out of the FTD book and tell them they are losing money by being FTD and 999 out of every 1000 will hang up becuase they think you're crazy. Cold, hard fact
 
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You think I'm gonna argue with you? (Except for your paragraph 6, since I think that day and age passed more than 10 years ago.)

And there are some folks making $ on FTD but they are sending far more than they fill, or can't/won't fill orders at all. Probably more than 1% of members, but not a whole lot more.

Excellent post.
 
CHR said:
You think I'm gonna argue with you? (Except for your paragraph 6, since I think that day and age passed more than 10 years ago.)

And there are some folks making $ on FTD but they are sending far more than they fill, or can't/won't fill orders at all. Probably more than 1% of members, but not a whole lot more.

Excellent post.
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you know Cathy.....there CAN be some money made as an FTD member, however, as a member, you MUST set YOUR own expectations, and maintain a positive "sending over receiving" game plan.
We FILL every single florist to florist order, we deny every single SFO incoming, we deny every single .com order that does NOT meet our minimums, and reciprocate with EVERY SINGLE shops that DOES send us orders!!
We rarely ever receive a "payment credit" to our clearinghouse, and are VERY VIGILANT at setting aside the funds that we "hold in trust" to cover the costs of the escrowed "commissions", and ALWAYS pay our invoices on time.
We STILL receive a ton of orders, HOWEVER, as 1 of only 2 shops left in our whole area that STILL maintain a wire service, we have a customer base that has grown steadily, servicing those clients that neither trust, nor desire to order online, or call an unknown shop, in an unknown area.
We target ALL our incoming order recipients, and turn them into "local" customers, because we "ASK" for their business...we don't "expect" their business!!
I don't believe we are any where near that "1%" that you speak of, BUT, if we were, we worked awfully darned hard for it!!
 
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Mikey

Mikey, I respect what you are doing in regards to your wire service. The only remark I want to make is that you are partnered with the wrong wire service.

First, let me say both wire services are trying to capture the consumer orders directly. But, one,FTD, is very much in your face about it. They are very blantant and are very open in thier quest for more and more money out of florists pockets and by diminishing the amount of service they return for those monies.

If you are satisified with your operations within a wire service, then why not go with the wire service that is the least blatant about it. Plus, they have the edge with costs. I am similar to you in the fact that I still need a wire service and for the same reasons. Where I differ is I believe that by not going with FTD, I am withholding money they would use against me by marketing for the same consumer I am.
 
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