TELEFLORA v.s. FTD

[CHR]

Also how about the 5% surcharge starting in Jan. 2011 to be taxed by FTD if you don't have at least 1 outgoing order for every 5 incoming orders?!

Really? Does this also apply to shops that are 'FTD only'? I can imagine a lot of Florida shops getting hit with this penalty.

 

[prestonway]

There is a proviso which states that FTD only shops may have this charge waived.

(my emphasis)

I'm thinking in terms of smaller communities both in Canada & the U.S.

This is NOT going to end well...

 

[Doug Munro]

This ongoing debate about the merit of incoming orders will never be solved to everyone's satisfaction on this board.

The bottom line is that this thread was started by an individual with a new shop, bills to pay, perishable flowers in her cooler. and most critical currently not enough local customers to pay the bills.

So....

1) Wire orders are discounted that's a fact!
However, if a shop is averaging a 65-70% GM even after discounting they provide a 100% mark up on cost of goods!
Here' s the math
Selling Price - $100
Discounted Price - $ 70 (netted from wire order)
Cost of Goods - $ 35 (not including labour)

2) A new shop has far more labour than required
Typically a new shop is a One or two man band, yet they don't generally have the business to support this.How many new owners simply do not take a salary?

3) Incomings provide cash flow for a new business
Yes I know it takes 30-45 days to receive the money, but as a former wholesaler I also know that the industry standard average for how florists pay their wholesalers is about the same, and I suspect in today's economy it might actually be slower.

4) Incomings use product sitting in your cooler
The nature of retail is that you must have inventory, unfortunately ours is a perishable product. So all too often new shops have more product then they can sell, sure they can cut back but generally this leaves them with no selection to offer customers. Particularly in today's world where they are competing with grocery stores and mass marketers who often have their inventory on consignment.
Incoming help to move inventory, yes at a discounted price. But the margin is still one heck of a lot better than the alternative, the trash can.

5) Incomings allow you to get your products into the homes and businesses of potential new LOCAL customers
With a little follow up (phone call, mailings) the chances are that a shop can convert these "potential" customers into actual customers

So for a new shop incomings can be a way to keep the doors open until they build local business. Again, wire services are just a tool that you use in your business, each situation is different.

 

[bootcampguy]

Pretty much...................well said

 

[duanermb]

This ongoing debate about the merit of incoming orders will never be solved to everyone's satisfaction on this board.

The bottom line is that this thread was started by an individual with a new shop, bills to pay, perishable flowers in her cooler. and most critical currently not enough local customers to pay the bills.

So....

1) Wire orders are discounted that's a fact!
However, if a shop is averaging a 65-70% GM even after discounting they provide a 100% mark up on cost of goods!
Here' s the math
Selling Price - $100
Discounted Price - $ 70 (netted from wire order)
Cost of Goods - $ 35 (not including labour)

2) A new shop has far more labour than required
Typically a new shop is a One or two man band, yet they don't generally have the business to support this.

3) Incomings provide cash flow for a new business
Yes I know it takes 30-45 days to receive the money, but as a former wholesaler I also know that the industry standard average for how florists pay their wholesalers is about the same, and I suspect in today's economy it might actually be slower.

4) Incoming use product sitting in your cooler
The nature of retail is that you must have inventory, unfortunately ours is a perishable product. So all too often new shops have more product then they can sell, sure they can cut back but generally this leaves them with no selection to offer customers. Particularly in today's world where they are competing with grocery stores and mass marketers who often have their inventory on consignment.
Incoming help to move inventory, yes at a discounted price. But the margin is still one heck of a lot better than the alternative, the trash can.

5) Incomings allow you to get your products into the homes and businesses of potential new LOCAL customers
With a little follow up (phone call, mailings) the chances are that a shop can convert these "potential" customers into actual customers

So for a new shop incomings can be a way to keep the doors open until they build local business. Again, wire services are just a tool that you use in your business, each situation is different.

Agree Doug.

That is all so true, and I wish we had tried it a few years ago when we were bleeding.

That being said, you can look at this business in a few different ways:

1. A marketing expense - use their orders to get your product into homes, and market the heck out of the recipient, or even better, the sender.

I believe that those who believe WS "can" be helpful to a business look at it this way.

2. A separate part of the business - Many like to look at it this way, but it makes the numbers look bad, always.

I believe that those who believe all WS are evil will only ever look at it this way.


A mixture of the 2 are likely how we should look at it. If it is slow in the shop and you are just getting by on what you have, can pay for the membership and have a ZERO profit margin on wire business. I would say that it is GOOD FOR YOUR BUSINESS.

 

[Doug Munro]

What I always find so interesting about the debate surrounding the profitability of incoming wires orders is this

Those opposed to incoming orders usually feel they know to within a fraction of a percent how much money they lose by taking incoming orders, Do they have as accurate a calculation on what the initial cost is within in their business is to acquire a brand new customer? Or the ongoing costs to maintain that customer?

I suspect they probably do not, but I am open to be proven wrong. So fire away

I would suggest that the actual cost should not only include actual advertising dollars spent but the discounts given on any particular promotion.

 

[BOSS]

What I always find so interesting about the debate surrounding the profitability of incoming wires orders is this

That the CONsumer is getting ripped off????

Dang, you guys have too much time on your hands for 12/23....

 

[Doug Munro]

That the CONsumer is getting ripped off????

Dang, you guys have too much time on your hands for 12/23....

Mark, in your former life you must have been a political reporter for CNN, if your going to quote a post, quote the post! Don't take a snipet of it (out of context) that serves your purpose to make a statement.

 

[bootcampguy]

I'll throw this out, for new customers you could spend up to .25 on the dollar to get them, if you snag them by 3 try's.........so when you get a WS order you're being invited into someone's home and get to spend time at the dinner table, for one week my name is on that piece in 3 places, promotionals arrive in 5 days and so on. People will remember where they get good or great flowers from. We send reminders letters for the last 3 years at each holiday and we can see that we are grabbing about 1/3 of WS order and converting them into our system. My ongoing costs to maintain customers is about .10 on the dollar.

You have to spend money to maintain anything. If you don't then someone will "sang" that customer away from you. I look at customers like cars, if you drive them hard, don't change the oil, don't wash or clean them, etc. then one day that car will give out on you. But if you maintain that car (like our customers) they will last you a long time. The LCV for a flower shop can be 15 - 20 years.

In the future "customer maint" is going to be the biggest issue. Like on the other thread about what you will do for customers, anything that's not illegal !! I carry Outback cards here (good a 4 rest) and we've sold over $400 worth, VD it will top $1000.

Whatever our pull rate is for the WS orders, we ledger that as advertising. this year so far 35%..................

 

[duanermb]

Dang, you guys have too much time on your hands for 12/23....

Neither of us actually work in a flower shop! But, since you mentioned it, on my first day off in months, I get to go in at 5AM tomorrow and green arrangements because the girls are so far behind.

 

[Mikey the Flower Guy]

Mark, it never "really" gets dark in Winnipeg!!

 

[CHR]

What I always find so interesting about the debate surrounding the profitability of incoming wires orders is this

Those opposed to incoming orders usually feel they know to within a fraction of a percent how much money they lose by taking incoming orders, Do they have as accurate a calculation on what the initial cost is within in their business is to acquire a brand new customer? Or the ongoing costs to maintain that customer?

I suspect they probably do not, but I am open to be proven wrong. So fire away

Not really fire.... just a couple thoughts....

Filling incoming orders is only a small portion of the actual cost of dealing with them.
1) Follow-ups for incorrect info and wrong and incomplete addresses takes far more time than it does for direct local orders. You have to go back through the "chain of possession" ( you -----> selling florist/OG ----> buyer) and wait... and wait... and wait
2) Reconciliation - follow-ups to reports, fulfillment, erroneous charges, contested orders after fulfillment ... can be time-consuming and maddening. Don't know about Canada, but some of the US OGs are prone to contest orders 3 months after delivery in hopes the fulfilling florists can't prove delivery with a signature. It's a cash flow game for them and a waste-of-time for the locals who legitimately deliver the requested orders.
3) "Unequal sending fees" of 5 - 7% per order. Couple that with the receiving fees and all hope of breaking even on incomings is gone. The effective discount rate is now 62 - 64%.

The best way to make money on WS orders is to send, not fill. All the rewards are on the sending side, all the penalties are directed towards filling shops.

I DO know how much it costs us to acquire a new customer... which is why we strive to treat existing ones like gold.

Filling cookie cutter orders that could have come from any shop (which is what incoming fulfillment has become in 2010) does more far more to reinforce the national brands than it does to win new local customers for the fulfilling florists.

Like I've long said, it fulfillment were such a way to grow a business, 1-800 would be opening more LFCs than closing them and they'd be pursuing more local franchise deals instead of shuttering stores at a rapid rate.

Those trends speak for themselves.

 

[BOSS]

BOSS's Quote of the day!

Like I've long said, it fulfillment were such a way to grow a business, 1-800 would be opening more LFCs than closing them and they'd be pursuing more local franchise deals instead of shuttering stores at a rapid rate.

Those trends speak for themselves.

Yep, exactly, and on top of that it continues to feed the machine that is doing the most damage to an already fragile industry.

And Doug... fair enuf... and actually CNN sucks....