What is wrong with OF's?

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Just a couple of thoughts, and then I gotta run.....

1. Walk-in trade is down, over 60%, in the average flwoershop from what it was just as little as 10 years ago.

2. Your customer comes to you today via: the telephone, the fax, the internet -- all first -- and walking in your store last.

3. CONVENIENCE AND EASY OF ORDERING are the two things sited in every survey as to why a consumer uses a particular store....or not.
Artistic ability or fancy, high style designs are not words that most consumers even know. Other words used include Freshness, good value for $$ spent. wide variety of flowers, friendliness and helpfulness of the staff.

4. With the above 1, 2 & 3 in mind, why is it so very necessary to always be in the extremely high rent district???? Eric, me and a number of others operate out of lower rent (warehouse) type buildings. My building fronts a very main & busy street -- we have the front corner of the building and are very visable. Parking is free, and easy -- you can pull right up to our door. It's a warehouse -- not a traditional flower shop with surrounding retail businesses!!

5. There are efficiencies to be obtained in every operation, including the flower business. Not every order needs to be an "artistic masterpiece" for $40.00. Standardization, which has been talked about over and over again, is the key here. We determine every day & every week, what price points we are pushing this week -- what general types of product will be used, what containers will be used, and so on.

Then I buy fresh to match our decisions, although sometimes a good deal in fresh will drive a decision.

We usually do not do products for orders 1 at a time....we do multiples. It is just easier to do 4 ot 6 of something, and less time consuming that to do it one at a time. The bonus is that we will always have another one ready to go.

The exception to this method is funeral work, which is always different.

Our party, special event, and holiday work started this "manufacturing process" trend to evolve in my store over 18 years ago. As we got busier and busier, I had to look for more and more ways to be efficient. Also, I did not always have the design help to have someone complete an entire design. However, if I broke each design down into step by step pieces, and had someone prepping containers, someone else greening, someone inserting fillers, etc.....it got done, and they gained a new skill! Along the way, they also learned the how and the why we do things a certain way.

Folks, we are not performing brain surgery! And if you talk -- really talk ----to your customers today, they are usually interested in simply designed things, because that is what they are being fed by all the big magazines and other sources, like martha Stewart, HGTV and the Knot.

Why not embrace change -- this is a great time, because of the economics -- to try something new. Heck, you may even like it!

Regards,

Cheryl
 
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FTD Numbers

Wonder if anyone has the numbers as to how many orders *they* (800TFTD, maybe PRO800TFTD) have vs orders *we* have annually.

Here is a tidbit from a market watch report about their sales numbers. It shows the domestic consumer segment at over 90 million and the florist segment at 44 million.

Sorry, couldn't make the link work.

FOURTH QUARTER FISCAL YEAR 2008 RESULTS
Fourth quarter fiscal year 2008 consolidated revenues grew 3.0% to $174.9 million, compared to revenue of $169.8 million for the same period of fiscal year 2007. This revenue growth was attributable to revenue increases across all three segments of the business.

Fourth quarter revenue for the Domestic Consumer Segment increased 4.2% to $94.3 million, compared to $90.5 million in the same period of the prior fiscal year. Fourth quarter Consumer Segment operating margin increased to 11.1% from 10.5% in the same period of the prior fiscal year, reflecting the Company's continued focus on profitability.

Domestic Florist Segment fourth quarter revenue was $44.8 million compared with $44.5 million in the prior fiscal year. Fourth quarter operating margin in the Domestic Florist Segment grew to 35.4% from 30.9% in the prior fiscal year period. This increase in operating margin is due in part to a shift in timing of advertising expenses related to the Easter holiday and a florist membership event that occurred during the third quarter of the current fiscal year but during the fourth quarter of the prior fiscal year.
R

Really interesting is the numbers laid out below this text. I couldn't configure it to post here, but if I understand "consumer sector" to be direct sales and "florist sector" to be independent florist sales then they are selling about double direct. (I am not a financial analyst, I could be off base, feel free to correct me on these terms)

Consumer Sector

Revenue: $94,325,000
COGS: $66,069,000
Gross Profit: $28,256,000

Florist Sector

Revenue: $44,756,000
COGS: $13,803,000
Gross Profit: $30,963,000


Much higher margin with the florists segment, and they pocket about 15 mil of that in the end.

The 30% gross margin of the consumer side is not too bad either!
 
A deal similar to the following might be workable with any OGs.

I want a yearly contract in which production quotas are specified for each month. In other words, rather than a quota of 60K per year, I want that to be broken into how much for each month.

They promise to send x number of orders for that month (say, $10K for December) and I promise not to refuse these orders.

Something like that would be a starting point.
 
A deal similar to the following might be workable with any OGs.

I want a yearly contract in which production quotas are specified for each month. In other words, rather than a quota of 60K per year, I want that to be broken into how much for each month.

They promise to send x number of orders for that month (say, $10K for December) and I promise not to refuse these orders.

Something like that would be a starting point.

The key would be to talk about average price points. $10,000 in $29.99 orders would make it tough to make a profit.
 
A deal similar to the following might be workable with any OGs.

I want a yearly contract in which production quotas are specified for each month. In other words, rather than a quota of 60K per year, I want that to be broken into how much for each month.

They promise to send x number of orders for that month (say, $10K for December) and I promise not to refuse these orders.

Something like that would be a starting point.

Hey Goldfish...

No business in its right mind, and few insane ones, will guarantee you an income. (That kind of thinking -- WRT Pensions and Job Security -- is what has driven the big 3 Automobile makers to the brink of collapse. <Yes I know. Another thread on a different chat group!>)

But what IS doable is protected territories. In return for your commitment to them -- that may include your cash buy-in -- they promise that ALL orders destined to a pe-negotiated set of Zip codes will be placed with you. All kinds of specialty products suppliers do that with their dealers. (In fact, that's kinda what the car makers do when they set up dealers.)

So, TANSTAAFL!

But this sort of thinking MAY be where the industry is headed.

Bill
 
Will the big 3 more heavily commit to a few at the expense of the rest of the florist services income? Weigh the proceeds from dues, cc clearings, advertising, technology and sending systems in a market vs guaranteed fulfillment and I'd be surprised if TF or FTD would take that route.

I also wonder if some dedicated fulfillment agreements don't walk a "price fixing" tightrope.
 
But what IS doable is protected territories. In return for your commitment to them -- that may include your cash buy-in -- they promise that ALL orders destined to a pe-negotiated set of Zip codes will be placed with you.
Bill
Yep that can and is being done... however.... they can not guarantee that they will have orders, or at least they can not guarantee they can have a set number of orders...
 
Will the big 3 more heavily commit to a few at the expense of the rest of the florist services income? Weigh the proceeds from dues, cc clearings, advertising, technology and sending systems in a market vs guaranteed fulfillment and I'd be surprised if TF or FTD would take that route.

Follow the money. The big 3 almost certainly get all/most of their money from monthly recurring revenue (dues, etc.). They will not kill geese to get golden eggs.

But a large independent OG has no such restrictions.

I also wonder if some dedicated fulfillment agreements don't walk a "price fixing" tightrope.

As long as the OF is allowed to reject orders that it deems un-profitable or unfillable, and the OG has the right to send those rejected orders elsewhere, then I doubt if price fixing could/would be an issue.

So, as long as we are drafting the contract, the OG would probably want a clause allowing either party to sever the relationship in the event that X% of the orders in a given time period are not accepted/filled.

(My Dad wanted me to be a lawyer. So I became a florist!)

Bill
 
As long as the OF is allowed to reject orders that it deems un-profitable or unfillable, and the OG has the right to send those rejected orders elsewhere, then I doubt if price fixing could/would be an issue.

So, as long as we are drafting the contract, the OG would probably want a clause allowing either party to sever the relationship in the event that X% of the orders in a given time period are not accepted/filled.
The OF too would want a clause of the same based on the OG not providing contracted volume, giving either party a way out.

The rejection issue is perhaps a sticking point. The OG would want fulfillment, and the OF would want orders, and both would want the order value to be as high as possible to maximize profit potential.

There is not a problem until the OG advertises one price and then send the florist something different, or until the OG sells way more $29.95 orders than $49.95 orders.
 
No business in its right mind, and few insane ones, will guarantee you an income.

Well, I don't agree on that one.

In this hypothetical deal, I'm not merely asking for their orders. I am offering a quid quo pro (something for something).

I am guaranteeing that I won't reject any of their incoming orders, as long as they promise a certain number of orders for each month. If I do reject, I am willing to pay penalties on the rejected orders.

If any WS is having some customer-retention problem because of unreliable fillers, it is in their best interest to find a good, reliable fillers who promise to fill anything they send.
 
Goldie - I am pretty sure the LFC's that are now being thrown under the bus had that agreement - they couldn't reject anything.
 
True enuf Jon.... they can not guarantee volume to a certain market.
 
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