Good point on the dispute resolution thing. I'm still not sold on wire services but to each their own.
Leah, I hate the 80/20 thing. I see no logic in it but I think it's some kind of mentality of having been "trained" by the wire services to ask for it, thinking that you are supposed to or something. I don't give it and I have never requested it. When I was on my own I'd just charge a small fee to my customer for my few minutes of making the call and then give full value.
Thank goodness - I was preparing to be flamed. I thought I was the only one who thought / felt that way. Glad to know I have company.
Regarding sales tax - I just spoke with my bookkeeper and she is under the impression your sales tax number is only good in your state - if you are contacting another state - you are supposed to be paying sales tax. However, I will be checking into this more fully.
Hello, everyone. It's been sometime since I've been here on the board.
Leah, Internet orders are actually tax exempt by Congress. To date, that has not changed yet, but activists are trying to get it changed. Orders that you take in your state from your website could technically be tax exempt, I opted to charge the tax just in case, my accountants were insane. All the literature that I could find supports the same. Web sales can be tax exempt, if I look you up on the internet & call you , technically, it is a web sale & could be tax exempt. Who says I found you in a WS Directory? I don't even use it, I look people up on the web. This is definately a question to pose a Tax Official in your respective states. Personally in GA we just have to have your TX exempt # on file for your order. You are supposed to collect the tax from your customer & pay your state your collected tax. Orders I get from my customers pay tax to my state. On my state tax form web orders are tax exempt.Sales Tax under all State's must be collected at THE POINT OF SALE and at your local sales tax rate and paid to your State's Sales Tax coffers.
When that order is subcontracted to another filling florist out of your area or out of your state, the incoming florist treats your sale as a NON-SALES-TAXABLE item FOR RESALE, since you've already collected the sales tax at your end, and the sale cannot be TAXED TWICE.
On the flip side, and if I were to send you an order from NEW YORK STATE, we would collect our State and County rate of sales tax (7.5%) and your bookkeeper would treat our incoming sale as a NON-SALES-TAXABLE sale at your end or for RESALE. Same as you treat sales now for Churches, Schools, and all other TAX EXEMPT organizations.
We can either provide you with our NYS RESALE NUMBER or fax or email you our State's resale form, ST-120 for your file records. In an opposite scenario, we would treat your order the same way at our side (for Resale), although I would only ask for your shop's resale number if I thought you might not be a REAL FLORIST. I really don't get too crazy in these areas.
As to the 80%/20% Historical Florist commission structure, we've had that discussion on numerous times in the past.
SFOX had pointed out LONG AGO that, it is both fair and just since, it was the SENDING FLORIST who created the sale to begin with by using their own money to market to their own customers. Had the sending florist not made that investment, the floral sale to your shop, would never exist. In addition, FILLING FLORISTS expended NO MONEY for the ORDER'S ACQUISITION CHARGES, which places their shop far ahead of the game.
What I continue to be amazed over, is in the fact that, a shop who still belongs to a WS has no problem filling those orders at a 29% discount (less 20% sending florist commission less 7% clearing house fee less 2% order transmission charge FTO) resulting in an ON THE SURFACE total net payment amount to them of only 71%.
However, when a shop has a smart accountant or bookkeeper, and they add up their total annual costs of belonging to a wire service, and treat that as AN ADDITIONAL EXPENSE they incur to obtain those incoming orders, and factor that as a percentage, they wind up with another 20% DISCOUNT on top of the 29% they already loose.
Those hidden costs are the HIGHEST INCOMING ORDER ACQUISITION charges on the planet, but very few shops ever figure it out.
And then, folks wonder why, they CAN'T MAKE ANY MONEY when they're filling orders at a TRUE NET to them of fifty cents on their dollar, when all of the WS SMOKE and MIRRORS are exposed.
As always, like all of us, must make a BUSINESS DECISION for your own shop and whatever works for you.
But, in my book (ledger) a full 80% paid to a filling florist and in their bank account within 48 hours using our company credit card, is considered TAKING CARE OF BUSINESS, both YOURS and OURS!
So, let's recap:
80% from a F2F Florist
71% through a WS
20% additional discount per incoming order (WS annual fees)
51% net net to filling florist via a WS.
Looks to me like 80% is much better than 51%, at least on my planet!
When you can, please take the time to add up all of the costs associated with your WS affiliation over 12 months except for the fees associated with the incoming orders to include the 20% sending florist commissions, the 7% clearing house fees, and the reverse the charges order transmission fees. Save all of those for later and when you deduct those totals from your annual incoming gross sales.
Good project for your Bookkeeper or Accountant!
Next, take the total gross amount of your incoming sales, deduct all of the costs of those incoming orders to arrive at the net payment to you.
Next, add up the total annual costs of belonging to your WS.
Divide the net total of your incoming by the WSs annual costs and arrive at a percentage. That figure is the additional WSs incoming order acquisition charge or addition percentage of order discount.
Let's say a shop has an annual gross incoming order amount of $30,000.00. At an on the surface discount amount of (-29%), that shop's net is $21,300.00.
The annual bare bones total costs for their WS affiliation is $3,600.00.
$3,600.00 divided by $21,300.00 is 16.9%.
That 16.9% is the additional per incoming order discount which must be added to the 29% for real total per order discount of 45.9%.
And so, shops which fall into that category, are in effect, filling all of those orders at a true net amount of 54.1% or fifty-four cents on their true net net dollar. With their COGS (Cost of goods) at 30% and their COL (cost of labor) at 25% and their COD (cost of delivery) at 20%, each order they fill looses them (-20%).
If you take it one step further and play with your DELIVERY COSTS, it gets even worse. We all know that, most dot.con orders don't really pay you anything for your real cost of delivery (by design). Since they're all in a battle over, WHO WILL HAVE THE LOWEST SRPs, their orders go through at both TOO LOW SRPs and NOTHING for that florist's delivery. In fact, many of them STICK IT IN YOUR EYE by advertising FREE DELIVERY, albeit at the filling florist's expense.
Even if you deduct $10 off the top of their gross in WS WAMPUM, the on the surface net is $7.00 and if you add the additional discount of 20% (annual ws costs), you might glean $5 per stop and drop. With regular gas at over $4.00 per gallon now(NY is at $4.39 and NJ is at $3.79), you wind up subsidizing their costs of delivery from the other profits you made from own customer's 100% sales.
The only area which can offset those costs and losses are REBATES and only if your shop sends out more orders than it fills. Most of us already know that, THE REALLY BIG PROFITS are made from the SENDING SIDE, which is why all the OGs, SKIMMERS, and DOT.CONS play in that game.
However, I've never believed that a SENDING FLORIST'S EARNED COMMISSION of 20% should be used to lower those costs since, that would be considered COST SHIFTING on my books.
These are the facts and unless a shop takes the time to crunch their own numbers, they will never be able to uncover their own truth.
Throw your own numbers up on your own spreadsheet and tell me I'm wrong!
We did it all back in 1984 with Lotus and when we were a member of seven wire services. Each one returned a net result of (-$$$.$$).
After which, we dumped six and kept the one we owned (back then).
Finally, and in 2004, we had to dump the new fore profit company too, as they no longer contributed anything to our bottom line. We rejoined the other one, and up and until they fired Greg Cocarri and launched their own direct to consumer website to compete with me, and they bee gone in May of 2007.
It's a whole new world out here now, and in my opinion, the only other people in my corner are OTHER REAL FLORISTS like MEE!
Every other entity in our floral industry are merely RIDING ON OUR COAT TAILS now and working off our blood, sweats, and tears.
:hammer:
I agree, you're possessed!!Our Preferred Florist list is one of the most valuable business tools we posess.
First - Congratulations on your move and best of luck with settling into your future. My shop does currently belong to FTD, though we are tossing the idea around of becoming wire service free. Thanks to all who posted all the tips, websites and how to's. They are much appreciated.
We are called directly (not wire service transaction) with some frequency and have always been asked to offer the 20 / 80 split with the florist. SO here is my question . . . I am simply asking but am concerned I will be in for a firestorm of comments, remember I'm just asking so I will understand the logic behind the request . . . why should I give you 20% of this order?
I know, I know. I pay alot more than 20% to the wire service. However, I can call the WS and have them act as mediator if there is problem. They do advertise nationally on my behalf. And as of today - I am choosing to pay for being a member. Just because the sending florist chooses not to be - I'm not sure I should be expected to honor this "professional courtsesy". Explain this to me, because up til now, I never understood the reasoning.
Leah
Welcome Back Beverly! It's good to have a fellow Californian FlowerChat member back on board.
Do you still have that cool automated hospital floral cooler?
Frank
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SFOX had pointed out LONG AGO that, it is both fair and just since, it was the SENDING FLORIST who created the sale to begin with by using their own money to market to their own customers. Had the sending florist not made that investment, the floral sale to your shop, would never exist. In addition, FILLING FLORISTS expended NO MONEY for the ORDER'S ACQUISITION CHARGES, which places their shop far ahead of the game.
:hammer:
As I was calling more and more, I began to realize that the receiving florist had no reason to give me the split and also shouldn't give me the split because they are paying the WS fees and I'm not.
I appreciate your post confirming that there was good reason for my uneasiness with that request.
Beverly
Maybe from other like minded independents where they can possible reciprocate they should?
I'll never send an order back to them
So, if a florist is not in a WS, they should not get 20%.
What is the motivation, then, to advertise the ability to get flowers delivered nationally and send those orders? Isn't this an across-the-board industry benefit? Doesn't this boost overall floral sales?
If you think that the WS's advertise to the benefit of the local florist, take a look at the advertising they are doing. Who's name is in the bold print? I'll give you a hint - It's not the one who will be making and delivering the arrangement.
A possibility indeed.
Sad perhaps but true - part of the criteria for being on that preferred list is accessibility. And a real bump is MAS technology, which means I can better service my customer. Service sometimes being more important than design or even value, as long as one can hit the acceptable criteria. (I'm not too sure about that last sentence - haven't had my coffee yet)