Is 30% of Something better than 0% of Nothing???

[sandytf]

Really great thread everyone. One point we've discussed before, but not mentioned yet in this thread, even if your on the fence in the ws profitability game, you have increased your buying power, enabled your company to get far better pricing and amployed a core staff. Sometimes we cut our labor so thin that we are completely reliant on just a couple very productive and experienced employeees. That scares the hell out of me if these 2 or three people decide to leave, get injured, or just call out sick at a holiday or big event week.

I hear you on that one. Our labor is extremely thin at times as well. When the "bosses" see the sales, we're able to add more labor that we sometimes desparately need! The wire ins show up as sales (even though our "true" sales aren't what we ring into the cash register). They don't always understand that our labor/week can't always match up to the exact sales for the week. If a wedding was paid for 2 months before the event, we still need the labor to get it done the week of the wedding, no matter what our sales may be that particular week. Sometimes very frustrating trying to explain it all the time to people who know nothing about the floral industry. (the same ones who make us take a complete inventory every 4 weeks) Oh, well, that's my job. :wallhead:

 

[RWK]

I hear ................... floral industry. (the same ones who make us take a complete inventory every 4 weeks) Oh, well, that's my job. :wallhead:

I as assuming that your departments/stores/ use the same cash/register/point of sale system as the other departments in your store.

This is where a separate florist specific POS would be beneficial. Having worked briefly in a grocery store floral dept. freelance - I understand the inventory issue.......a separate florist specific POS should have theability to keep track of your inventory automatically.......even down to how many stems of fresh flowers were tossed that week due to shrinkage.

 

[Joe Mioux]

.... part is that he included $10.8K discount my shop is supposed to be giving to WS+OG, into his calculation of what I could be giving to my local clients.

Obviously, this is not correct. The correct amount that I could be giving to my local clients is just the WS monthly fees, without discounts.

.

$200K shop with 20 pct business coming from WS which totals $40K.

Even with the $15600 in fees which is better?

$184,400 in Gross Revenues ($200,000-$15,600= $184,400) with WS

or....

$160,000 in Gross Revenues without WS membership?

Since any COGS incurred by additional sales gained from promoting your own business wo ws is the same as any COGS associated with WS sales, we don't need to factor the Cogs into this analysis.

But to me more specific to a $200,000 shop, where can a shop gain 20 pct extra business? Weddings? yes., So why can't a flower shop owner do both?

Be a WS affiliate gain extra sales AND market to the locals? Seems like both can be done.

I don't understand why the two are considered mutually exclusive?

Also, you leave out the revenue earned from outgoing Wire Orders and Rebate checks. That little bit of info is always left out of con-WS debates.

Also again, why is a shop paying $400 per month to FTD, Renegotiate the fees. Certain shops can get these fees lowered and if you can't find a different WS who will.

joe

 

[RC in Dayton and Cincinnati]

"Fiddling" part is that he included $10.8K discount my shop is supposed to be giving to WS+OG, into his calculation of what I could be giving to my local clients.

Obviously, this is not correct. The correct amount that I could be giving to my local clients is just the WS monthly fees, without discounts.

So it's not like I could give $6.34, but more like $2.

But hey, to be fair to him, the actual dollar amount is not the issue.... The issue is whether a WS member could use the money they are currently spending on WS for a better use or not.

His position is that we should. My position is that, if a shop is earning money from WS operation, it would be hard to quit it just to reallocate the resource.... UNLESS, shifting the money to something else would immediately produce the same amount of profit.

Goldfish,

I knew those probably weren't your real numbers, but this is the first time someone has provided enough data for an example.

I'm also aware the biggest flaw in what I'm proposing is the results will be slow as business won't be built up overnight. In fact it will probably take years.

With that being said, in general, florists are notorious for expecting their customers to pay for their inefficiencies, the biggest inefficiency being inadequate volume. Filling incoming wire order to pump up volume is a band aid approach to a more severe problem.

As you pointed out you are willing to forgo some personal income in hopes of building a better business. Unfortunately most florists are unable or unwilling to do that. Instead they expect their local customers to pay extra for the inefficiencies of the shop. And then they wonder why they can't build anything of value.

RC

 

[RWK]

...................Also again, why is a shop paying $400 per month to FTD, Renegotiate the fees. Certain shops can get these fees lowered and if you can't find a different WS who will.

joe

Joe brings up a very valid point here. You are NOT locked in to any set amounts of fees - From member fees, to reciprocity fees, unequal sending fees, credit card processing fees, and the like - EVERY SINGLE ONE IS NEGOTIABLE.

A good example - take credit card processing rates/fees - FTD CASHFLO for example. I worked with a shop for eighteen years - in that time, the previous owner was paying a certain percentage rate to FTD Cashflo for the CC processing. When a new owner takes the reins, he gets a better rate from his local bank.....when FTD finds out, they send the rep to ascertain why......the rep says " Well IF YOU HAD ASKED US, WE WOULD HAVE MATCHED THE RATE "

AGAIN, YOU ARE NOT LOCKED IN TO FIXED RATES - IF THEY WANT YOU BAD ENOUGH, THEY'LL GIVE YOU WHAT YOU WANT.

 

[jamese]

This whole thread just goes to show us, the each one of us is searching for the right anser for OUR own businesses. That is what b/m storefronts are all about.
The right to choose how you run your business is your choice. Sharing these ideas gives all of us the opportunity to see how our FC community deals with the issues faced with todays floral industry.
Keep the lines of communication open, share your thoughts, ideas, negitive and positive...it helps others.
IT is generally a small group that respond to these threads, I for one feel that the quiet ones are reading and hoping that some of your excellent advice or example will help them out from time to time. Where can you get real florist giving out real solutions and opinions? Right here at Flower Chat!
This is a great thread, good example of sharing what works for some...may not be for others.
Enjoy the week, and thanks for this useful exchange.

 

[domineaux]

:wave:

How many of you are taking wire service orders from companies that are secretly owned by the wire services?

It would be natural to create an order gatherer company and spin off orders through that order gatherer name.

Example... order comes in from YourSpectacularflowers.com, which is actually an order gatherer company owned by wire services.

Do you know when orders come in through the wire services website store, instead of being sent out as wire service site orders at 7% they are labeled as coming from the YourSpectacularflowers.com and you are charged another 20%.

This way the wire services can take a full 27+% as a commission in lieu of the 7%.

Don't say it isn't or can't be done. There is no way to find out easily, because you don't know the original purchaser of the wire service order.

We don't know zip about where the order originated or who made the wire service order, unless somehow the purchaser gets into the loop.

:tread: Poor florist running to catch up, but never will this way

 

[goldfish]

Suppose you are a struggling florist (which means all of us, really ). Suppose you happen to be a WS member.

You are paying $350 a month in fixed fees. After some serious number crunching, you discovered that you are getting exactly $350 back in "return"*; that is, your NET earning, after monthly fees, is zero, zippo, none**.

* "Return" here means gross profit after all the costs and labor, but before monthly fees.
** This zero-earning situation, by the way, is not at all unusual. If you are not a big sending shop and your wire-ins are about $1,000 a month, your NET is almost certainly close to zero.​

Now, what would you do?

You might think "Let's quit the WS!", because you are tired, aren't making any money (only WS does). You're simply wasting your time.

Yup, I agree. I think any florist with zero (or less) earning from WS should quit. This part is easy. Now the difficult part...

Simply quiting the WS by itself won't make your business any better in a financial sense. By quiting, you would save that $350 monthly fee, to be sure, but you would also lose that $350 "return" (see definition above). So overall, there would be no NET gain/loss.

In general, quiting a WS will have two effects in financial statements. It would decrease your total revenue, but increase the percentage of gross profit margin. If you were at break-even with WS before quiting it, these two effects would simply cancel out, and the net income would stay the same.

"Quit WS" isn't enough, that's the bottom line I'm trying to get at.

In order for "Quit WS" strategy to have any positive impact on a florist business, one would have to come up with other ways to spend the $350 that's now free and create more than $350 in return.

I believe that most florists who quit WS are not doing that.

Overwhelming majority of florists are not a risk taker. Instead of spending $350 on something new, most of them would rather a) do nothing or b) look for so-called "no-cost" promotions - which is a fancy word for "I-won't-feel-bad-even-if-this-doesn't-work-because-I-didn't-pay-for-this" advertisement.

Facebook, twitter.... how many of you would do these stuff, if they charged you some money? Very few. Unfortunately, "no-cost" promotion is not going to work in a real world. It has something to do with the fact that you aren't really "in it" unless you paid for it.

There are a lot of ways to spend $350 a month that, possibly, will give us more than $350 in return. WS is one such example.

Other examples....

• Increase your monthly budget for PPC by $350. Or any kind of advertisement for that matter.
• Invest $2,000 (6 month-equivalent) on bridal shows.
• Invest $2,000 on infrastructure, hoping to make your daily operation more efficient.
• Create an employee incentive package that costs $350 on average.

.

... and on and on.

As you can see, none of these is a sure bet. You might lose your money in the end. But the alternative is do nothing, which guarantees that your business will NOT grow.

So what I think is that, if you are currently a member of WS and contemplating of quitting it, think again.

Do you have a plan after quiting it? What is your plan to spend the freed WS fee to your advantage? If you don't have the answers, I would wait until I get the answers straight and go from there.

Without the plan, I think there won't be much difference with or without WS. It's really not a matter of whether we should be a WS member or not. It's a matter of whether we have a clear strategy to grow our business, and how much risk we are willing to take for that purpose.

Thank you for reading.

 

[RC in Dayton and Cincinnati]

Don't thank me. I didn't read it

 

[Joe Mioux]

Goldie, the one thing I have seen and you probably have as well is that WS incoming orders are drying up.

The trend is less not more, and that is why I think it's important to focus more and more on Websites.

In my business, I can almost see a 1:1 relationship between web order increasing and WS incomings decreasing.

This is the reason I am getting out of FTD. I am still money ahead, but not by much and I figure the labor needed to reconcile FTD's ROF's offset much of the profit anyway.

Therefore, if the trend is down, and the future looks bleak for any additional incomings then its time to let the WS go or atleast the one that is marginal, as in my case.

joe

 

[bloomz]

Thank you for reading.

No - Thank you for taking the time - you're another one I should have mentioned here (besides Joe Mioux) that has a good command of numbers and in-depth analysis of them.

and I appreciate it - an un-impassioned serious look at profitability.


So I was just telling 2yla - the gorillas have the orders - yes I hate that but it's true - I guess we need to figure out how to get and work with those orders.

My very smart friend told me last week joining bloomnet saved him from having to downsize and said "as much as I hate to admit it" cuz he used to be one of us incoming haters, too, as did I.

Gotta not only shoot when the ducks are flying - but also where.

The premise and reason for this post - I'm glad it was considered thought provoking and a good thread - (except the one who thought it was just troll bait).


Added - what Joe said - but if you think, as I do that you're already getting the Lion's share of internet orders in my/your area - I be looking for additional revenue.

I'm pretty sure the gorillas have some orders.

 

[Joe Mioux]

Added - what Joe said - but if you think, as I do that you're already getting the Lion's share of internet orders in my/your area - I be looking for additional revenue.

That is a very good point! More importantly, it is something worth considering as it relates to WS business.

btw, somewhere in this thread someone asked how to get more WS incoming.

For the past year or so, we have been having our Dove orders re-directed to flower shops not chosen by us. Not sure where I heard this but someone told me or I read it somewhere (maybe here) that orders get re-directed to shops that are past due on their WS statements So, with that in mind, I guess the easiest way to get incoming is to not pay your ws statements. However, that negates the rebates..... Oh what a tangled web......

joe

 

[RWK]

That is the one thing I always hated most about wire services - AUTO-FORWARDS. I have seen it where you reject an order and after a couple auto-forwards and rejects by other shops......here it comes to you....A SECOND TIME............and I have seen it happen where you get the SAME ORDER a third or fourth time.

..........always wonder what stupid idiots are controlling that......always wondered what made them think that if you rejected once.....what makes them think that you won't do that a second or third time.......

 

[bloomz]

For the past year or so, we have been having our Dove orders re-directed to flower shops not chosen by us. Not sure where I heard this but someone told me or I read it somewhere (maybe here) that orders get re-directed to shops that are past due on their WS statements So, with that in mind, I guess the easiest way to get incoming is to not pay your ws statements. However, that negates the rebates..... Oh what a tangled web......

joe

I've long thought they do that.

There used to be a way to have Dove's not autoforward, dunno if it still is active or not - but I bet if you squeeky wheel enough you can get them to turn it back on for you - I always did, tho I had to actually go to Coccari once to get it done.

With Mercury we can control that - they reject back to us if the shop we chose isn't available.

 

[Dorothy]

Equation(s)

I posted this once and didn't take so I'm trying again. Hopefully, it's not all mumbo-jumbo but at the time I wrote it made sense:

Goldies example:

$40K wire-ins (20% of $200,000)
discount = $10.8K
membership fee = $4,8K
Total WS expense = $10.8K + $4,8K = $15.6K

~

In Goldie’s example total revenue equals $24,400 from WS. This Wire In revenue should be separated in the books from locally derived revenue (that's been mentioned before). The “profit” generated from Wire Ins could then be used for the Advertising/Marketing Budget to the local/Internet target market. Not only does this keep the business owner on top of what the Wire In part of the business is doing, if there is in fact revenue generating from it and it was earmarked for advertising, then the advertising/marketing budget is also kept in check. That’s the only win I can see….

The main problem is, even with this detailed breakdown of which I’m quite sure many business owners appreciate (thank you Goldfish), is that the 27% discount on OG orders is often more than that, especially so at busy holidays, because typically in a small shop the owner is the only one who really pays attention to the price of the order received in the first place.

A designer’s first thought – and I know there are exceptions – is not, “Can I do this for that?” This is what's really on their minds: Is it a vase or container arrangement or a plant or dishgarden? Where's the recipe? Where's the picture? I have to look on the Internet? How do I do that again? Who is it for? Do we/will we have the flowers? Do we have the plants? Ooooh, I'll have fun with this one! These are all questions/thoughts that must be taken into consideration, in order to fulfill the sender’s request (local or wire). Price is the last thing on their minds, until they go to make the thing and only then if you, as a business owner, have communicated the importance of paying attention to the price and what is asked for…and even then…. Requesting a price increase or rejecting the order, even when a price problem is recognized, is most often the owner’s responsibility (in a small shop) and really this problem shouldn’t happen in the first place but it must be taken care of ideally before the order even gets to the worktable.

So the owner is busy with wire orders that increasingly need to be analyzed order by order, because of heavily discounted or specific - no substitution - online OG senders, including Teleflora, FTD, 1-800 and all the rest that offer discounts on their websites, which ultimately takes the focus off other important business decisions. Every time an OG sends an order to a florist that is too specific, under priced, and most often does not factor in a delivery charge, precious time is taken away [stolen] from the business owner who already has limited time to spare.

IMO this is a huge reason why owners are turned off and PO-ed at WS. If OGs and florists alike checked their directories for min. pricing, availability, delivery charges, etc., and sent the correct/reasonable amount in the first place, the whole process would run more efficiently. Then the owner would have more time to spend on analyzing and marketing the business, ensuring quality assurance and generally keeping everybody happy instead of heading off and solving problems that shouldn’t even be part of the equation in the first place!

 

[Joe Mioux]

I've long thought they do that.

There used to be a way to have Dove's not autoforward, dunno if it still is active or not - but I bet if you squeeky wheel enough you can get them to turn it back on for you - I always did, tho I had to actually go to Coccari once to get it done.

With Mercury we can control that - they reject back to us if the shop we chose isn't available.

Yea, for Dove orders on Visual Ticket we can select "do not Forward" but we sometimes forget to click the button.

joe

 

[nmwinn]

One other thing to consider is buying power on a 0 net gain that Goldie mentioned above. If you have more product running through your shop it should be leveraged with your wholesalers. That in turn allows you more value to your customer and if you can really work it, an increase in the net.

Just a thought..

Nicole

 

[CHR]

Nicole -

I agree to a certain extent, but buyer power only comes with deeper buys. With WS catalogs featuring so many products, the buying power only works if incomings match what you are already carry in your store.

As WSs broaden the array of varieties shown, most stores who do a decent amount of incomings need to stock 'wide' or buy on an 'as needed' basis - which is the least efficient way to purchase.

 

[bloomz]

That made me think of something. I do a cursory look each month in the new cookie cutters TF has in their statement - because so much of it is very appealing.

I'm not positive about this but it bears looking into - it sort of seems that wire service offerings are simplifying.

Are they broadening the array or narrowing it?

The new Telflora cookie cutters I am finding so appealing are using easy to procure available flowers. FTD's imagery rework seems similar.

I'm gonna have to take a closer look at this later tonight.

Maybe it's the ones I am choosing to offer, and I do choose them for that very reason - appeal and "fillability". I love the Teleflora cube collections but have never even offered ones with Cymbidiums and the like in them, even hydrangea I steer away from (we don't regularly stock hydrangea, and I guess many others don't either)

Is it possible they don't like complaints either, and they are well aware that some of the offerings are hard to duplicate?


It's a bit silly the presumption that they don't care about complaints with their choices of offerings.

Don't forget - these gorillas are data monsters and know how to analyze best sellers and complaint ratios on specific items.

I also don't notice shops that fill decent amounts of incoming, like Heather, complaining about irresponsible requests for specific flowers.

Heather? This bears looking at because I don't want disappointed customers with our name on the order.

I know it's been an issue in the past, but is it becoming less of an issue as these companies mature as pure play order gatherers?

News flash: OG's don't like complaints either and they know what it costs to lose a customer that was expensive to aquire in the first place.

Attracting a customer with an appealing bouquet of hydrangea, freesia and orchids that you can't get filled is plain bad business.

Quick look shows TF's birthday selections shows only 3 items with what I call uncommon flowers in them, out of 36 items offered.

 

[nmwinn]

Nicole -

I agree to a certain extent, but buyer power only comes with deeper buys. With WS catalogs featuring so many products, the buying power only works if incomings match what you are already carry in your store.

As WSs broaden the array of varieties shown, most stores who do a decent amount of incomings need to stock 'wide' or buy on an 'as needed' basis - which is the least efficient way to purchase.

Yes but that can be controlled as well. We try to tightly manage what is on our site based on the flowers and container style.

My TF membership is being leveraged for the internet buyer not the incomings. (Yes I know I can get a cheaper site and we will get there but we are a new shop and we needed a quick fix.)

Anyway, I agree with your statement that broader buying is a mistake. If we receive incomings for items we don't have on hand, we can either call and ask if we can substitute or forward the order. It seems to be working so far for us. (We are small and have the time to do this right now - I know that wont work for everyone.)

Nicole