Wire Service Special deals do they exist for large volume senders?

[domineaux]

Had an interesting conversation last night with a florist. It seems this florist does a large "Send" business.

The florist indicated they make more by processing through wire service than they would, if they sent their "Send" orders directly to receiving florist and deducted 20% from the payment to the receiving florist.

I believe what this person said, but she would not discuss it beyond what I've mentioned. It appears, the wire service is giving them a deal that is better than them doing a direct transactions with local florists.

This got me thinking, because I just can't get a fix on how that is possible. Maybe the "Send" florist pays no wire service monthly fees, but would that be enough incentive to not do direct business with known order filling florists? Since the receiving florist is paying the WS commission and allowing the 20% commission to the sending florist.. I'm just not seeing enough incentive as this florist described.

Maybe the WS owns the sending florist. Maybe the WS rebates part of the commission paid by the receiving florist to the WS. Maybe the WS is tweaking the send florist orders with delivery fees, etc.
In other words, is the wire service messing with the order payment amount unknown to the receiving florist?

Something stinks! I think!

I'd be very interested read other florsts' take on this.

 

[BOSS]

High volume senders can get rebates as high as $8.00 PER order, PLUS the 20%, plus any $ervice charge the levy against customers.

On a $50.00 average order, a high volume sender could generate upwards of $32.95 per order. Plus there are (or used to be) other perks like free credit card clearing, steep discounts on containers, FREE POS systems, no marketing advances, no directory charges etc...

 

[Knife's Wife]

A few things... the higher your out going volume, the higher your rebate becomes, larger senders also have discounts for containers when ordered early, as well as other buying perks offered along the way that are not offered to the general membership. Sending is the money maker, that is why there are so many order gathers and send only florist.

Yes, It does stink that the filling florist struggle to make the buck, while the sending side who does little work makes the profit.

 

[theRKF]

Wire services need the membership dues, which are a significant profit source. Member florists demand incoming orders, incoming orders come from large senders, so senders are in demand. Rebates are around $3 for a normal shop, but as Boss mentioned they are much higher for the big senders.

 

[CHR]

Also, there's a cash flow advantage on sending THROUGH A ws. Call a florist direct and you'll need to pay today on a CC. Send through a WS and you can keep your cash 'interest free' for up to 50 days.

But the real answer is REBATES. The biggest OG is getting CASH $10/order.

 

[domineaux]

Thanks to everyone. This is totally amazing to me. It is tough enough on the brick & Mortar shops that fill and deliver.

Then when you realize the very people the WS are supposed to be partnering with are actually victims.

Now this is just my opinion, but it seems to me the only way to have a future in this industry is fast pointing towards becoming an OG.

To be real honest, doing business like that doesn't appeal to my better nature. IMO, everyone should be a winner; not be a winner at the expensive of others.

 

[RWK]

The wire services........ever since their inception.......FTD was the first - Started in 1910 - began with favoring the senders and that has not changed since the beginning.

 

[domineaux]

I won't argue with that, but don't you think the WS have gone too far, nowadays?

 

[Knife's Wife]

Rick, I believe in the beginning the split was different, and the theory was for it to be a wash, just a means of transporting orders. It has change drastically over the years, rewarding the sender more and more at the expense of the filler.

Oh how it has changed!

Joan

 

[domineaux]

As mentioned above, the WS is rebating senders from $3 to $10 per order.
This opens the door to all kinds of issues that affect delivery florists.

I was playing with the math and wow! The prospects aren't bright for delivering florists.

Example - Not uncommon to get a $60 order delivery included.
The sender gets 20% or $12, the WS gets 7% or $4.20 = 16.20 of the sixty
This leaves $53.80 to the delivery florist who is outt of that cost of the vase, flowers and delivery costs or appx. $40 to $45.
An $8 to $10 dollar profit at best.

It would seem if the WS is rebating $8 to $10 to the sending florist, the sender charges a Sender fee to customer of $5 to $10 and the sender makes 20% on the order. The only one making any money that makes sense in the transaction is the sending florist, and WS.

Don't knit and pick the math above, I was just thinking it through and discussing an example using approximations.

We discontinued WS the end of last month. Each day I seem to learn of more WS stunts. It would be a very viable service to this community, if there was a consolidation of all the stunts and tricks being pushed upon WS member order filling/delivery florists. I am certainly not the experienced person to do such a thing, but I'd bet there are plenty of people on this forums that could put the proverbial axe in the stump. I am reminded of several computer books that have been called some "Named Annoyance". At least when you get all the facts about annoyances you are better informed to make decisions.

I honestly think most delivering florists just don't have any idea of the truth of the matter working with WS orders.

I've read alot of rants on these forums regarding WS, but it seems most of us kinda ignore rants and whines. However, facts and the truth are hard to dismiss.

 

[CHR]

Domineaux -

The numbers, splits, rebates, etc.... their effect on both consumers and florists... their distortion of the marketplace... has been discussed and debated many, many, many times here at FC over the last 7 years.

No one's ignoring the rants and whines, it's just many of us have said the same thing for many years. Some cope by becoming OGs, other cope by heavily sifting through incoming orders and others remove themselves from traditional WS participation.

You can go back through threads and see examples of shops raving about the benefits of all the incomings right up until they close their doors (there are several examples).

I'm more interested in reaching out direct to consumers whose orders we'll handle ourselves - via web, phone, walk-in, referral, social media.... and I believe most of here are, too.

 

[domineaux]

Domineaux -

The numbers, splits, rebates, etc.... their effect on both consumers and florists... their distortion of the marketplace... has been discussed and debated many, many, many times here at FC over the last 7 years.

No one's ignoring the rants and whines, it's just many of us have said the same thing for many years. Some cope by becoming OGs, other cope by heavily sifting through incoming orders and others remove themselves from traditional WS participation.

You can go back through threads and see examples of shops raving about the benefits of all the incomings right up until they close their doors (there are several examples).

I'm more interested in reaching out direct to consumers whose orders we'll handle ourselves - via web, phone, walk-in, referral, social media.... and I believe most of here are, too.

You last paragraph makes perfects sense. I am taken aback realizing as conspicuous as WS are within the industry they are responsible for so little in the way of profit for order filling florists.

I conclude from our WS experience. It would have been more profitable for us to have given away the completed arrangements for free we delivered from all our WS orders for the past year.

We did add to the satisfied customer base; the only tangible benefit we received.

 

[BOSS]

Domineaux-

Something of a history lesson... back in the day when the transfer of orders originated, things were much different. You could expect to get IN and order for just about every one you sent OUT...so the 80/20 split totaled 100% over the course of a year. This was when florists generated all orders. My family has been doing this since the days when we had to use Western Union to send orders...

Some time went by and as new wire services sprang up thay had to do something to attract senders to use their services. AFS came along with a REBATE (actually it's a 4 letter word) that changed the landscape forever. They grabbed huge market share by buying orders. Thus the other wire services had to go with rebates in ever escalating dollar amounts to buy back the orders. Florists, myself included helped to foster this bidding war by playing the services against each other to get higher and higher rebates.

The real issues began to appear when the wire services began their own web presences and began trying to capture the original sale, and then knowing that they had to continually find more volume for their stables of florists that wanted incoming orders they looked to non-florist marketers to "gather" the orders from florists first and send them back to florists keeping them happy that the volume was up. BUT the change tilted the 80/20 away from florists and created an uneven playing field where florist generated INcoming order outnumber the balancing OUTgoing orders. Today the OG's pump orders in, but most florists do not have the offsetting 20% to balance the books.

The numbers no longer work to even out the in/out dollar ratio, thus *most* florists do not make a profit on incoming orders. We KNOW that a shop can not survive profitably with 100% incoming business. The current thought is that if you have even 16% exposure to incoming your at the top of the acceptable limits.

Like Cathy mentioned, I too would rather deal directly with the consumer sending into my market, and let them deal with you when sending into yours. It IS the way it's going to end up eventually. FTD will cease to be an issue within the next couple years, 800F too. Teleflora still has a chance of survival as they are the lessor of the 3 evils but they too have some changes they will need to make if they hope to remain viable as a *partner* for florists...at least they have their ears open still, while FTD and 800F are trying to do everything they can in their power to control the filler fools...all the while losing members at a rate I have not seen in my 40 years in the biz...

 

[domineaux]

Thank you for your thoughtful and carefully worded response.

We have been with TF for over a year and just cancelled.

This is just an aside note:

We are located in Orange County California, which is a heavily populated area. The income demographics are attractive for luxury type items. We have Lamborghini, Rolls Royse dealers and some of the biggest names in designer and boutique product retail.

We also have alot of florists, and competition from just about every kind of retailer imaginable. The large number of TF members basically dilutes incoming orders as they are spread among so many florists. Naturally, if I were running TF I would distribute orders similarly. The current economic situation has definitely slowed the number of incoming orders passing through TF. So much in fact, we frequently didn't receive incoming orders for weeks on end. Just a fact, if you don't have enough business for everyone it's best to at least spread the business as failrly amoung your members.

I have worked with many large companies that were facing economic issues. Don't even think TF, FTD, 1800, etc., are sitting on the sofa waiting for things to change or someone to fix their problems. They are in their conference rooms on Saturday morning brainstorming and strategizing with some very competent intelligent people. When a company is public or has stockholders there is no way they are going to make excuses and whine. Never be naieve enough to think they are going down with out a fight, and I mean a tough fight.

There is a financial problem with this... our monthly subscriber fees along with online order system was around $240 per month. This is like set in stone cost. Regardless of how many orders we received the number of orders were prorated against that $240 a month. Not a pretty picture. LOL

We determined we were losing money consistently $100-$350 per month just on TF. Our biggest problem... we weren't pushing send orders by advertising and promotion. When I used the little spreadsheet listed in my sig below I determined there was no way we could possibly make incoming orders prosperous for our business, even if we tripled incoming orders. The bite from the TF fees is just too much.

Do I fault TF, well to some degree I do. I do because TF is too eager to acquire and keep members to realize they have diluted the prospects for all their members to get enough orders to offset their memberships fees. It should practically be set in stone with vendor services like a TF to make sure their members can at least earn enough from their services to break-even on them.

Facts are facts, and the facts are clear that everyone that owns a florist business must make decisions about services and products they use. It is not enough to keep a designer in the workroom producing arrangements, when there is little or no profit in doing that work.

I wouldn't go so far as to speculate about the future of WS, because they have grown into huge businesses. Businesses that have the ability to strategize and make things work even in some of the toughest situations. The WS can lose alot of members, raise their fees, limit their membership and still be very profitable. Actually, they might be more profitable by limiting their memberships. When businesses know they can make money by associating with them; selling memberships at higher costs shouldn't be a problem.

The WS and OG have a great deal of experience in using internet technology to promote their businesses. The internet is practically the only way to reach large numbers of customers in our area, because broadband internet is cheap. The local population is very computer literate, so much so, most people just toss their phone books and yellow pages into the garbage.

Getting favorable promotion on the internet is a difficult process, and elaborate planning and technical skill is necessary to get your name out there and keep it out there. Keeping it out there is a constant process, because the internet technolgy is so dynamic. The things that are working today will probably not work within another month. It is practically the job of a professional internet person to keep things going your way... promotion wise.

 

[BOSS]

They are in their conference rooms on Saturday morning brainstorming and strategizing with some very competent intelligent people. When a company is public or has stockholders there is no way they are going to make excuses and whine.

Ah but Teleflora is a private company. They could, if they wanted to, kill the other two membership wise in a year or less. Easily done by being up front, open and keeping the memberships best interests as yours.

Never be naieve enough to think they are going down with out a fight, and I mean a tough fight.

They can fight all they want. They can get tough too. Problem is, you can't fight by yourself, and florists are simply walking away from the fight, cuz they know it's in their long term best interest to do so. Sure there are still many florists making money sending orders, but we know coverage is an issue, a growing issue... that alone will bring them down to drop ship only in many parts of the country.

 

[domineaux]

Ah but Teleflora is a private company. They could, if they wanted to, kill the other two membership wise in a year or less. Easily done by being up front, open and keeping the memberships best interests as yours.

They can fight all they want. They can get tough too. Problem is, you can't fight by yourself, and florists are simply walking away from the fight, cuz they know it's in their long term best interest to do so. Sure there are still many florists making money sending orders, but we know coverage is an issue, a growing issue... that alone will bring them down to drop ship only in many parts of the country.

------------------

You could be right of course. My experience directly in this industry is limited.

I really don't blame the B & M florists that are sending orders, nor do I have ill feelings toward those B & M shops that have advantage by being big senders. The whole purpose of WS was to expedite orders between florists. I recall years ago where people like 1 800 were buying ads in local yellow pages representing themselves as local florists. The internet has facilitate this kind deceitful business practice by quantum leaps. The internet marketers are being facilitated by WS in the destruction of a great institution, the small florist business.

Educating the B & M florists that keep accepting the OG orders, and holding onto their unprofitable WS accounts should encourage many florsts to leave WS. This would be a huge push in the right direction.

 

[Doug Munro]

I always find threads on rebates interesting to say the least. Having been around for a while I vividly recall the days when there were no rebates paid.

The first one I heard of back then was when AFS came to Canada and starting offering a $3.00 rebate for orders sent. At the time I was in the wholesale business and it was all I heard about from my florist customers, how they were leaving FTD or Teleflora to join AFS for the rebates. Eventually the other wire services had no choice but to offer them as well to stop the migration of their customers. The interesting part is that FTD held out longer than all of the others, finally they reluctantly gave in and even then were chastised by the florist because their rebates were too low compared to the other guys.

So for any that feel FTD or Teleflora is to blame for this issue, I beg to differ. What made the rebate an industry standard was the florist themselves. As an industry we made our own bed, now we have to sleep in it. For those of you who have been around for a while , did you ever make a concious choice to send your order s through the wire service with the highest rebate?

One last comment, why is it that no one appears to see any fairness in larger senders apparently earning larger rebates? When you order product from your local wholesaler do you expect a discount based on higher volume purchases? Do you consider that a fair business practice to the shops that can not purchase the volume you do?

 

[domineaux]

One last comment, why is it that no one appears to see any fairness in larger senders apparently earning larger rebates?

Fairness?
Business is business and I don't think anyone reading this thread thinks that fairness is even a consideration.

When you order product from your local wholesaler do you expect a discount based on higher volume purchases?

I would think that would be the case, but most small shops rarely venture into higher volume purchases. Yet, they do provide steady income streams for wholesalers, suppliers and distributors.

Do you consider that a fair business practice to the shops that can not purchase the volume you do?

I don't think most local florist shops are thinking too much about volume. Most are trying to do steady business and their purchases are consistent, not high volume.

Education of the Local Florist Shop owner is the key to making changes with regard to WS and OG in this industry. Local Florist have to "Come to reality". They must realize that significant numbers of incoming orders from WS cannot earn them more the $8 to $12 dollars profit on an average order of around $60. Large numbers of incoming orders are not a solution, but will lead to "going out of business" that much sooner. Order filling florists must balance the proifts from WS sales against the WS fees. Ours with TF were appx $250 per month, Base Fee $150, Online Order System $80, quality fee $20. I can't tell you how grateful I am that we didn't buy into the TF POS system that would have bound us for five unprofitable and burdensome years to TF.

The little excel spreadsheet for download in my sig is to help people better understand the true costs of WS.

You can also take the little spreadsheet and play with the numbers to "what if". By that I mean you can create a bunch of "pretend" send orders and see the impact on your profits. I didn't include a provision for rebates, because at the time I created the sheet I didn't know anything of rebates. I think I' will rework the sheet this week and include a rebate per send order as well.

Thanks to you Doug Munro for your response. I appreciate your point of view, and certainly don't dispute that everyone should take advantage of opportunities earned.

 

[BOSS]

One last comment, why is it that no one appears to see any fairness in larger senders apparently earning larger rebates?

I for one don't have a problem with it, I have a problem with rebates in general but...

Thing is, if it were all B&M stores that's one thing. BloomsToday IS NOT A FLORIST, and neither are many others!

 

[domineaux]

Not trying to beat a dead horse

Over the past few days I've been working on another spreadsheet for analyzing WS statements.
Yesterday, I was looking through the WS directory. In my area, Costa Mesa, I found 22 florists that are using TF.
When you think about that many florists that are WS members of just one WS how much business is being diluted over the large number of member florists.
During this eco-slowdown we saw orders fall off more and more. Some months we had been getting as few as 3 orders.

The lack of orders is definitely related to the number of orders sent. No question about that.

Then when I found that OG and other senders were getting rebates on orders I was shocked enough to create this thread.
Now it is really beginning to dawn on me the only way to make money off WS is be a sender.
The OG are a necessary evil for the WS to survive. The WS have to pump orders to florists to keep them as members.
The small commissions earned by WS are negligible when you consider all the pile of fees for just participating with WS.
So... the WS rebate to senders to keep the orders coming, and the most efficient senders are OG.
The local florists are getting some orders and the WS continues to survive by increasing fees, and basically keeping florists that fill orders in the dark.

Maybe there is a profitable way to work with WS and fill Incoming orders, but I'm not finding it.
Probably the only best way is to cut all WS services except the basic membership. Use the directory instead of Online Order system, WS POS, magazines, etc.
It is pretty easy to take on all those extra services.

The recent addition of a $79 late fee is exorbitant and completely out of line. As I recall, we had a $79 late fee on a balance under $100.
The $20 quality control fee is another rip-off. If florists don't produce quality arrangements they should be scrutinized and possibly terminated.

This is just an aside note. We also found that OG would frequently try to go back on delivered orders and complain about quality, etc.
We initiated the practice of taking pictures of every arrangement we delivered from WS. This way we could rebutt spurious complaints for credit.
It didn't matter in some cases, especially gift baskets with food. OG would say the food was soured,etc.

I don't mean to make it sound like a constant issue. The complaints were unfounded and offensive to us, because we were not pushing out any "get by" orders.
In fact, we were constantly doing more for customers... trying to use WS orders as a stepping stone to develop some customers from recipients.

Maybe, the WS should think about a whine and suspicious complaint quality control fee they charge OG senders. LOL