FTd's Green Tax?

[Joe Mioux]

I'm so surprised you're leaving WS I always thought you were the biggest proponent of it. What was the straw that finally broke the camels back?

I am a proponent of florists doing some accounting and then base the decision to participate OR not participate in WS business based on those figures.

I am not a proponent of that accounting being inaccurately loaded with a lot of costs (for example some fixed labor and/or fixed delivery costs) that do not belong in the analysis. Honest number crunching is the key.

I am not a proponent of the incessant emotional rantings "WS are bad, WS-free is the way to be," drivel that permeates many WS threads on this board.

If you think I am a proponent of wire Services, after reading my posts, you would be incorrect.

Now, to answer your question, I still have two TF memberships, one for each shop. I only pay for one, but I want two so I don't get listed as an ASB florist at one of the locations. In other words, I want that incoming business.

FTD is getting dumped because after doing some break even analysis on my fixed costs of membership, my variable costs of membership, the Gross Revenue earned and the number of orders filled, I was just above break even with FTD. MY Break even point, last year, was 126 orders and I filled around 150 orders. So yes, I was profitable but just barely. I do not use FTD for outgoings.

joe

 

[fleurty]

Thanks for the answer. I'm on here just like everyone else to learn something - You are an intellegent business man, "I know that!" Since I've quit I've always wondered "what is wire service success?" I've been looking for that answer. That is the primary reason why I troll this section the most. You seemed to have wire service success so that is why I asked. Sounds like you have a sweet deal with TF 2for1

 

[prestonway]

FTD is getting dumped because after doing some break even analysis on my fixed costs of membership, my variable costs of membership, the Gross Revenue earned and the number of orders filled, I was just above break even with FTD. MY Break even point, last year, was 126 orders and I filled around 150 orders. So yes, I was profitable but just barely. I do not use FTD for outgoings.

joe

So am I correct in assuming you REALLY didn't need two wire services to begin with, Joe?

And further, that Teleflora is responsible for more incoming than is FTD, at least in your area?

And that you filled 150 orders a year, or only about 3 a week, on average?

And that because you get more incoming from Teleflora, that is the reason you're dumping FTD (the number of Teleflora orders exceeds your profit break even point by more than FTD does)?

And the "bottom line"...if FTD provided more incoming, you wouldn't have left?

Enquiring minds...

 

[Joe Mioux]

So am I correct in assuming you REALLY didn't need two wire services to begin with, Joe?
yes and no, i wanted two for coverage and incoming


And further, that Teleflora is responsible for more incoming than is FTD, at least in your area?yes

And that you filled 150 orders a year, or only about 3 a week, on average?only 150 for the entire year and given my FTD incoming $volume and FC and VC, I only needed 126 to break even

And that because you get more incoming from Teleflora, that is the reason you're dumping FTD (the number of Teleflora orders exceeds your profit break even point by more than FTD does)?yes and i don't want to bother with two different wire services anymore, it is a pain

And the "bottom line"...if FTD provided more incoming, you wouldn't have left?We have a Winner! yes that is correct.

Enquiring minds...

Hope this helps your mind.

joe

 

[prestonway]

Hope this helps your mind.

joe

The reason I'm asking is it almost makes for a college "case study", Joe.

There's only one other FTD shop listed in Carlyle, and they're an ASB.

You would think there would be a pile more incoming for your area, so I wonder what volume of incoming the competition is getting?

Does their lower delivery charge (only $1 less), make a difference?

Also, they seem to have lower minimums by $5.00 almost across the board. Would they get more because of that?

For those that "really" want incoming, your answers could prove interesting.

 

[Joe Mioux]

The reason I'm asking is it almost makes for a college "case study", Joe.

There's only one other FTD shop listed in Carlyle, and they're an ASB.

You would think there would be a pile more incoming for your area, so I wonder what volume of incoming the competition is getting?

Does their lower delivery charge (only $1 less), make a difference?

Also, they seem to have lower minimums by $5.00 almost across the board. Would they get more because of that?

For those that "really" want incoming, your answers could prove interesting.

Oh this is an easy one to answer.

Up until three years ago, I had two FTD memberships and my competitor was only TF.

So I know full well the volume of FtD bus that comes into this area. The volume is about 150 orders per year for that location as well. If she is paying full membership, she is losing money. I would bet that she is because she wouldn't know any better to negotiate.

She became FTD after I left. This was a way for the FSR to keep his membership coverage the same. He and I have had many spirited debates over the years re: FTD's OG bus, etc. So we know each other well and I knew what he was doing.

Last week, a FTD vp person called me and asked me to stay and promised me more FTD.com for various other towns, one being my Branch shop location. She also asked me if I wanted .com orders for other cities.

The problem with this scenario is that as soon as a different shop complains or they try to get a new shop signed up, i would lose preferential treatment of those incoming orders. So in my mind, its not worth much.

I suspect FTD had been sending (some/many) .com orders to other shops and not to me because I didn't send FTD, so in there minds I wasn't deserving. ... and that is fine.

So, no, I don't think it is the directory price listings that made any difference. It was more internal FTD directing orders else where.

FTR: The competitor learned the bus from my parents and then went into competition against them.

my branch shop is located in her town.

To recap: In April 06 I dropped FTD in Carlyle, but kept FTD Breese (FTD competitor location). In Fall 06, I dropped FTD Breese and that is when FSR signed up other shop. I wasn't getting enough business to justify two FTD memberships and then figured at full membership that I was still losing money.

Given my incomings are way off, I suspect we are seeing more and more consumers buying direct.

joe

 

[TOTO]

Incoming orders and Costs of Aquisition

There's always been a VERY FINE line regarding the profitability of a wire service membership.

As we all know, all of the profits are made on the SENDING SIDE which is why we have so many dOG's, OG's, NON-LOCAL PHONIES, and DOT.CON's playing on that side of the fence.

Best case scenario for profitability is when you only have ONE WIRE SERVICE and you're SENDING OUT more than you are filling.

The REBATES from your outgoing can be enough to offset your DUES and FEES, provided you have kept their optional $ervices down to the bare bones and like Joe, you have negotiated the absolute BARE BONE WS membership fee.

The jury is still out over the value of filling the HIGHLY DISCOUNTED INCOMING, especially when that volume exceeds your outgoing.

And, the hidden costs associated with the incoming is what throws the entire scale out of kilter.

On the surface, we all think that, we're getting paid a net of 70 cents on the dollar. 100% less -20% sending florist's commission less -7% clearinghouse fee less -3% order transmission fee.

After that, we still have to deduct the cost of the delivery on their average order amount of let's say $60.00. Since that is around $8 in real money, that works out to another less -20%.

$60 less -30% = -$18 = $42 less -$8 = $34 payment to florist

The additional incoming order acquisition costs are a variable and can only be realized when a florist puts all those numbers on Cathy's Wire Service Spreadsheet calculator.

But, for a hypothetical, I'll throw out an annual membership cost of $3,600.00 based on $300.00 per month.

And I'll split that by applying half the cost to the outgoing and half the cost to the incoming.

If the average shop fills 5 orders per week or 250 per year, the $1,800.00 additional cost to incoming works out to an additional (-$7.20) per incoming order's cost of acquisition.

Note: If you shop fills less than that, your per incoming order acquisition cost grows higher.

In the end, the $60 GROSS nets the filling florist $34 less the (-$7.20) or a true amount to florist of $26.80 per order.

In cases like this, florist winds up filling a $60 gross order at a REAL DISCOUNT of (-55%) and not the 30% on the surface discount they all thought it was.

With cogs at 30% on the $50 gross after deducting the delivery cost is $15.00 and the labor at 20% for $10.00, the cost to fill the order is $25.00 and one gets $26.80, or $1.80 incremental profit per order.

And so, one winds up filling 250 orders in order to earn $450.00 in additional income you may never have had over the course of a year.

Maybe it's a keeper for some, but it's always translated to MUCH ADIEU ABOUT NOTHING! lol

I'd rather do one family funeral and glean the $450.00 and throw the other $1,800.00 into my wallet.

 

[prestonway]

I suspect FTD had been sending (some/many) .com orders to other shops and not to me because I didn't send FTD, so in there minds I wasn't deserving. ... and that is fine.

So, no, I don't think it is the directory price listings that made any difference. It was more internal FTD directing orders else where.

joe

You once again raise an interesting point, Joe.

I wonder what percentage of incoming orders are .com orders in most shops...for both Teleflora & FTD.

In other words, if you don't fill for .com, is there enough incoming left to warrant membership in many cases?

In a small town of only two shops, you're either getting all or none. Kind of makes you dependant on them...and them on you if you're a "one horse town".

In comparison a city of 10 to 20 members may only have 2 or 3 preferred fillers, which leaves a lot of shops "on their own" in developing florist-to-florist relationships to garner incoming.

My city of 350,000 has 15 FTD members, for example, yet over the years we have received VERY few .com orders (part of the reason is we weren't open on Sundays & hardly ever carried codified items, but that's another story).

Further, it takes time to build a reputation for a sender to have confidence in a new shop. It wouldn't surprise me if new shops were 90% dependent on .com orders for ANY incoming.

I can definitely see how you would be in a better bargaining position in a smaller town, in comparison to most big city shops!

No wonder Luc in Elliot Lake keeps smiling...

lol

 

[Joe Mioux]

PW, you are correct. The small town FTD market rate makes it more attractive from the Fixed costs of membership.

However, look at your city. 350,000 pop with 15 FTD shops. That means FTD shops per capita is 1 shop for every 23,333 people.

Compare that to my entire county of roughly 38,000 and 3 FTD shops. Per capita is 1 shop for every 12,600 people.

Over the past couple years, I have seen most of the orders come in via .coms.

There are a few of my local area flower shop friends that are FTD only, including one large STL grocery store that sends me orders for this area, even in my ASB areas where the other shops have an FTD presence.

Without looking,I bet I am close to 90 pct .com orders.

Oh, btw, during that conversation with the FTD vp who was trying to get me to stay, she mentioned something I found really interesting. She told me that Vera Wang does not want local florists filling her signature line of FTD branded flowers. Those are drop ship priority.

joe

 

[bloomz]

Oh, btw, during that conversation with the FTD vp who was trying to get me to stay, she mentioned something I found really interesting. She told me that Vera Wang does not want local florists filling her signature line of FTD branded flowers. Those are drop ship priority.

joe

I know about that one - she doesn't want her name associated with lack of quality and consistency of "real florists".


Interesting huh?

 

[Joe Mioux]

I know about that one - she doesn't want her name associated with lack of quality and consistency of "real florists".


Interesting huh?

very much so....