the Butler Report?

[TOTO]

And so, we're back to FREE!

There are TWO ASSUMPTIONS on the part of the WSs (and their SPECIAL FRIENDS) which skews any profitability formula they put out here.

They ASS-U-ME we're NOT GOING TO CHARGE THEM for OUR LABOR and they ASS-U-ME we're NOT GOING TO CHARGE THEM for OUR DELIVERY.

In both assumptions, most folks are only discussing THE COSTS of those two features, while suggesting some of the BIGGER SHOPS can afford to GIVE THOSE $ERVICES AWAY! (or simply absorb those costs)

In my analysis, and while this may sound STRANGE to SOME, I also expect to add a PROFIT to those costs, and CHARGE ACCORDINGLY.

From Joe's point of view, any shop can certainly handle two extra orders each day, and without adding any additional labor costs to their operation and the same might even be said about our delivery $ERVICES. I could even agree with that position, if it weren't for the fact that, the WS's charge their members, anywhere from $300 to $500 per month for the privilege of filling their orders that way. Add to that, the inherent problems those DOT.CON orders usually come in with, and that's another WASTE of our valuable time when we TRY TO FIX THE PROBLEMS which began at THEIR POINTS OF SALE, not ours.

This is where the ADDITIONAL INCOMING ORDER ACQUISITION CHARGES apply, thus putting those incoming orders into OUR LOSS COLUMNS.

The big question (fore mee) is: WHY SHOULD WE, WORK FOR FREE?

Why should WEE, DA FLORISTS, be expected to give a WS (and any of their middlemen), anything for FREE?

They surely don't give any of us anything for FREE!

We just need to simplify the process, go back to basics, and ELIMINATE ALL OF THE MIDDLEMEN while returning to our original relationship of the consumer's 100% floral sale GOING DIRECTLY TO THE FLORISTS and with an outgoing order GOING DIRECTELY THROUGH THE FLORISTS, thus ELIMINATING the MIDDLEMAN'S FINANCIAL WRINGER PROCESSES.

In my UMBLE OPINION, we just can't afford them anymore, nor can we afford to allow them to RIDE ON OUR COAT TAILS for FREE, while paying them our hard earned money for their HOT AIR BALLOON RIDE.

 

[Joe Mioux]

dang, i had a long answer written out got busy and got timed out.

Short answer,

Most shops look at this stuff backwards. They get an order in and assume they have to charge labor as Gross Labor, say 30 pct.

However, the key to profitable wire service business is staff based on non wire service sales, but accept ws business.

this way you push your labor and overhead as a percent of GS lowers.

ex: Oct, $50K non wire sales, Gross labor is $15K, design labor is $5K.

Gross labor equals 30 pct, design labor equals 10 pct of Oct's gross sales.

Now add an extra $5K in WS incoming.

You now have $55K in gross sales, but look what happens to your Gross and Design Labor. Gross labor goes to 27 pct and design labor goes to 9 pct as a pct of Gross sales.

What happened? You just became 10 pct more efficient with your labor cost.

Joe

 

[Oldtimer]

Sorry for butting in, but this discussion about WS orders will always be a conversation about numbers. As was indicated, a flower shop doing a million dollars in sales annually probably wouldn't have any real problem handling $35,000 of incoming wire orders. Afterall, that's less than 4%. A flower shop doing $250,000 annually however, may have a far different opinion when talking about accepting that same $35,000 in wired business. The question is, how many flower shop are doing a million these days and how many are doing a quarter of a million and how many are doing less? The wire services have told florists for years that it is not advisable to accept more than 20% of sales in incoming wired orders and $35,000 in wired orders would translate to 20% to any business doing $175,000 or less. How many of you think that a florist doing $175,000 annually can even afford a WS today??

You can toss all the numbers around that you may wish but there is a couple of areas concerning incoming wires orders that numbers just don't cover. As the economy continues to tighten up and business gets tougher and tougher, how many of the remaining florists are going to be able to continue to pay out these hugh dues and fees just to belong to these "exclusive clubs" just for the opportunity to fill orders on the belief that they could possible "make a buck" on this completely unpredictable portion of business and if all the monthly numbers just happen to fall into place?

The second area is how much longer can some continue to grant cost concessions on incoming wire orders that they are unwilling to even consider for their own local customers. For example, this thread mentions possible delivery cost reductions to funeral homes or hospitals on incoming wire orders, but how many florists actually give a break to any local customer who may be the second or third order going to the same hospital. Of course not! Or how about thinking that a floral designer two has already done 3 orders this hour for full value, can do a wired order for FREE because the cost of labor is already paid for. Would any of you be willing to do that for your local customers too??? And no one is willing to drop the price of their flowers to their regular clientel, but do it every day on incoming wire orders. And of course, pay handsomely to have the opportunity to do so.

The fact is there will always be someone that can show that there is a way to make money on incoming wire orders. The problem is these days there are really very few florists that could ever meet all the sales number requirements and those few are getting smarter and smarter because they realize that the WS may be no longer be in their best interest either!!

 

[Joe Mioux]

...orders would translate to 20% to any business doing $175,000 or less. How many of you think that a florist doing $175,000 annually can even afford a WS today??

Membership fees are negotiable. FTD costs me $85 per month and TF $99 per month I spoke with a shop today who was offered $39 per month through TF.

If you can't negotiate better terms, then yes, that should be a factor in determining profitability. Also, lets factor the rebate checks back in, that will offset the member fees.

OT, you never mention this part.

second area is how much longer can some continue to grant cost concessions on incoming wire orders that they are unwilling to even consider for their own local customers. For example, this thread mentions possible delivery cost reductions to funeral homes or hospitals on incoming wire orders, but how many florists actually give a break to any local customer who may be the second or third order going to the same hospital. Of course not! Or how about thinking that a floral designer two has already done 3 orders this hour for full value, can do a wired order for FREE because the cost of labor is already paid for. Would any of you be willing to do that for your local customers too??? And no one is willing to drop the price of their flowers to their regular clientel, but do it every day on incoming wire orders. And of course, pay handsomely to have the opportunity to do so.

It is no one's business how a flower shop owner conducts their respective business. You bring this issue up all the time and it is just a nothing issue. Also, don't assume that occasional - certain discounts aren't granted to local customers.

It is just moot. When a flower shop accepts incoming business they also send out as well. The commission one gives up for incoming is offset by the commission earned on the outgoing.

If a business wants to offer one customer a discount, that is their prerogative. Your argument is about jealousy and it has nothing to do with that business earning a better net profit.

My argument is........

If the WS can earn a business a better net profit then participate.

.... or don't.

If the ws costs a business money then it needs to go.

Yours is all wireservices are bad and if you participate in the WS business you are cheating your local customers.

The latter part of this line of thinking is wrong because your outgoing ws business is comprised of the same customers who you deem as being cheated.

 

[alisonm1215]

If it takes you 30-45 minutes to make a $60 bouquet - or 2 - something is wrong. 10 minutes max per order.

I'm taking the entire order into consideration here:
Receiving the order-If it is a phone order-they can take a while.
Reviewing the order (sometimes inquiring takes a little time) I have a small shop, so I have to make sure it is cost effective to accept the order. Usually the order is from OGs like 'from you' or WB, so they are cheap tfweb boquets that are under priced and no delivery charge is included. I also have to make sure it is deliverable, so I check the address. It is often wrong and so is the phone number. Sometimes I deliver to rural areas, but it has to be cost effective-again I run a small shop around $195k gross.
Ensuring that I have the products
Proccessing the flowers They are usually ready to go, but some one has taken the time to do this.
Pulling the flowers and containers or foam and designing the piece (cookie cutters or roses=fast)
handwriting card (much more personal than a computer)
handing it off for delivery

Considering the time it takes me to deal with the WS, I don't really think 15-22.5 minutes is out of line for the real time it takes to fufill an order. Whipping out a bunch of rose arrangements on V-day is a different story; you know what you are going to sell. However, every day WS orders vary; you never know what you are going to get.

Scheduling labor; I don't know how you can schedule labor in 30 minute increments. it just isn't practical. Yes, you can make scheduling changes at the beginning and end of the day
However, I don't think you are going to have very happy employees having them punch in and out during the course of the work day waiting for an order to show up.

is that what you do? have your staff punch in and punch out during the course of the day.

My point was not to scedule labor in 30 minute increments. My point was is it really cost effective to keep a WS for an extra 25-30 bucks a day? You brought up a very valid point that each shop has to look at what works for them.
My history with WS? I did not get 2 orders a day and it was not cost effective for me, so I dumped the service.

And the only time I have an employee clock out is for luch if they are leaving the shop, or if it has been a seriously slow day and there is absolutly nothing to do. It is ludicrous to think a situation of clocking in and out would be condusive to a pleasant work environment.

Each shop is unique and every owner has to review their business plan. I don't care what numbers they spin to make them look good.
My plan=WS not a moneymaker=cut it.

 

[Joe Mioux]

allisonm1215,

my point is don't schedule labor based on WS volume.

Schedule it based on your local daily business.

Most shops have excess labor. If you are going to pay them anyway, you might as well keep them or yourself busy.

As long as you cover your variable costs of that order, i.e. COGS and WS fees (i am leaving out labor because I have yet to see any shop at full capacity) you will earn a better net profit.

Any money over and above the VC's will contribute to your Fixed Costs. Those costs remain whether or not you accept an incoming order or not.

Joe

p.s. WS business will not work if you don't receive a dollar volume over and above the break even point of the WS fees and Variable Costs. Conversely, WS business may also be unprofitable if a florist is incurring extra labor, delivery and other associated fees.

 

[alisonm1215]

Joe,
Exactly.

The second area is how much longer can some continue to grant cost concessions on incoming wire orders that they are unwilling to even consider for their own local customers. For example, this thread mentions possible delivery cost reductions to funeral homes or hospitals on incoming wire orders, but how many florists actually give a break to any local customer who may be the second or third order going to the same hospital. Of course not!

I give more breaks to my local and non-WS customers than I ever gave a WS. They are the reason I'm in business and they are much appreciated.

 

[Oldtimer]

...orders would translate to 20% to any business doing $175,000 or less. How many of you think that a florist doing $175,000 annually can even afford a WS today??

Membership fees are negotiable. FTD costs me $85 per month and TF $99 per month I spoke with a shop today who was offered $39 per month through TF.

If you can't negotiate better terms, then yes, that should be a factor in determining profitability. Also, lets factor the rebate checks back in, that will offset the member fees.

OT, you never mention this part.

Joe, no, not all florists can negotiate their dues and fees. You may have special circumstances that allow you to do so, but the vast majority are stuck with the full monty! By the way, aren't you the same person that talked about dropping a ws about a month or two ago??

second area is how much longer can some continue to grant cost concessions on incoming wire orders that they are unwilling to even consider for their own local customers. For example, this thread mentions possible delivery cost reductions to funeral homes or hospitals on incoming wire orders, but how many florists actually give a break to any local customer who may be the second or third order going to the same hospital. Of course not! Or how about thinking that a floral designer two has already done 3 orders this hour for full value, can do a wired order for FREE because the cost of labor is already paid for. Would any of you be willing to do that for your local customers too??? And no one is willing to drop the price of their flowers to their regular clientel, but do it every day on incoming wire orders. And of course, pay handsomely to have the opportunity to do so.

It is no one's business how a flower shop owner conducts their respective business. You bring this issue up all the time and it is just a nothing issue. Also, don't assume that occasional - certain discounts aren't granted to local customers.

It is just moot. When a flower shop accepts incoming business they also send out as well. The commission one gives up for incoming is offset by the commission earned on the outgoing.

If a business wants to offer one customer a discount, that is their prerogative. Your argument is about jealousy and it has nothing to do with that business earning a better net profit.

My discussions on this subject have never been about jealousy. And , yes a flower shop owner can conduct his or her business anyway they wish. The problem is that ws business is always going to be subsidized business and I agree with Mark wholeheartedly and that is any portion of a business must eventually stand on it's own. Yes, you must consider all portions - incoming and outgoing and all the costs of the ws and then determine whether it shows any profitability, not just a small piece of the puzzle.

Here's a simple comparison for you. You are located in Clinton County (by the way, I have been through Carlyle and it's a nice area to live), but the total population of the county is about 37,000 and the county covers about 500 sq miles. The population density of your county is about 75 people per sq mile. I live in Kane county and the population is roughly 500,000 and the county also covers about 500 square miles. That makes the population density about 1,000 people to the sq mile. Now do you think there is a possiblity that we might have a different cost to deliver than any florist in your county. And that is the point that most ws reports seem to gloss over. You probably have both a hospital and a funeral home in your town (county seat). South Elgin has none. Elgin, next town, has two hospitals, but it was a minimum of 50-60 minutes round trip. The closest funeral home was 20 minutes away and the other two were 30-35 minutes away, one way. Do you think that any florist with those travel times should allow ws orders to ride FREE under any circumstance?

My argument is........

If the WS can earn a business a better net profit then participate.

.... or don't.

If the ws costs a business money then it needs to go.

Yours is all wireservices are bad and if you participate in the WS business you are cheating your local customers.

The latter part of this line of thinking is wrong because your outgoing ws business is comprised of the same customers who you deem as being cheated.

For the record, I don't think that all ws are bad, only the 20-80 program they are based on. I'll say this again and slowly. If the economists are even close to being right and this recession may be as bad as the situation we experienced in the mid 70's, florist might be well advised to think very strongly about continuing to subsidize and exteed concessions on ws orders and better focus on what they can do to help their local customer afford flowers. I wasn't a florist in the mid 70's, but the company I did work for went through alot a pain. It goes without saying that anyone that has experienced the decline of their 401k will understand the following. Talked to a gentleman the other night that has worked for the same company for 35 years on the shipping dock. His 401k in this small company was worth over $600,000 only 4 or 5 months ago and now is worth $92,000 LESS. The question is, under these conditions, how many people will be willing to buy flowers over the next 12-14 months and is your money going to be better spent on WS or trying to keep your local customers? Joe's right - it's your choice.

 

[Joe Mioux]

re: your last sentence,

It's not an either or situation. A florist can do both.

re: deliveries

Your cost of delivery and my cost of delivery have the same components, vehicle cost, depreciation, insurance, fuel, maintenance and labor.

re: demographics

My deliveries are more spread out than Kane county's. The 62231 zip code is huge. It covers 10 miles N to S and probable 15 miles E to W. Given your population is more dense, you have the luxury of short distances. The time might be comparable with our respective deliveries.

re: negotiating fees

It never hurts to ask.

 

[RWK]

In negotiating fees......I have to agree with Joe. I'll use a past shop I was with as an example. This shop just recently transitioned from one owner to another. The previous owner was using one of the Wire services as her Credit card processing and paying a percentage. Then when the new owner took the shop and did research, He discovered that he could get a better percentage rate elsewhere.....and when the wire rep found out about this.....He said that the Wire service would have matched or beaten the rates if they had been asked.

As I was neither the owner then, nor the owner now, but just an employee, I do not know what the rates or percentages were.

 

[Joe Mioux]

and let me drive home negotiated member fees even further.

Re: FTD they have something like 11000 member shops, guess what? with the cost of delivery they are in catch-22.


Given the geography of the U.S. and the FTD demographics of 11000 shops, they are not going to get 100 pct saturation of recipient end points.

In other words, FTD is spread too thin so they need shops!

NEGOTIATE CHEAP MEMBER FEES!

I realize that in urban areas this won't happen, but for many shops in mid to small cities???? Negotiation is viable.

Joe