Wire Services Are Buying Your Customer

[Oldtimer]

Labor is a fixed cost on a daily or weekly basis. I am not advocating that any flower shop hire additional labor in order to fill ws orders. My argument has never been that.

Flower shops can easily accept two or three additional orders per designer per day. As long as those orders cover all the variable costs of that order. Accepting additional business, even if it doesn't cover all the fixed costs will make that shop more profitable.

joe

Sorry. didn't mean to let this subject slip. We've been alittle busy.

Joe, got to say, I'm kinda in agreement with TOTO here. What you are advocating is that you are subsidizing the labor aspect of incoming wire business with with revenue from your local customers that are paying for your fixed costs. Now from you've said that much of your incoming is multiple orders for the local funeral home, I can well understand how delivery cost really isn't a problem for you. However, what do you tell other florists when they may be charging $8 for local delivery and after discount that becomes about $5.75 and now that they have to deliver those 3 extra orders from their one designer and the driver needs an hour and a half or more for a round trip and you're paying him $9 an hour. Isn't delivery also part of the profitability picture for wire business and isn't that driver also part of fixed expenses?

 

[Mikey the Flower Guy]

he he he.....

I used to be a commodities broker, and a soybean market analyst.

I buy Ethanol when the price differential between Gas and E85 when the price is a 40 cent spread. Given my fuel econmony loss with E85, that is where I need to be save money.

Also, I own stock in ADM, so this ethanol craze has made me happy.

However, ADM is also one of the biggest recipients of Ethanol subsidies.

and the family owns farm ground.

Now read between those lines.

joe

a "corny" bean counter??

this is kinda like a "refresher course, for all those that have NOT been involved from the beginning of time, in REAL FLORISTS struggle with the "new" floral business!!
First off....the wire service model is quickly coming to the end, just like "cheap" oil.
Second off, MOST florist shops are anxious to join a wire service to receive orders...IF they're good at what they DOO, they'll get them, even in a dwindling supply stream.
Third off, most SMART florists, join a wire service to SEND orders, and WILL fill orders for you, that's called "reciprocation", and as long as they can show even the SLIGHTEST margin on the side of PLUS, will GLADLY fill any AND all incoming, and market the bejesus out of the recipients.
Fourth off, most REALLY SMART florists have upgraded their internal structure AND technology, have sharpened their pencils, and have narrowed their "expectations" of making a buck on EVERY SINGLE ORDER they send OR receive.
and fifth....I've seen WAY too many shops, just sitting by their machines, "hoping" an order will pop out, so they can do their work, KNOWING full well, they're gonna LOSE money on it, BUT, relieved that someone STILL loves them (soon to be part of the "out of business" model)
Folks, some of us do pretty well by the wire services, we "limit" our exposure to NON performing orders, WEED OUT those "sources" that gleefully send you under priced orders, and openly "recommend" that SOME shop owners have their heads examined, when boasting they get a "check" to "cover their costs"......
I hope this thread has opened some eyes...cost accounting doesn't HAVE to be as complicated as discussed, BUT, it is YOUR responsibility to KNOW what YOUR costs and cogs TRULY ARE, in your own little world, and eradicate the unnecessary overheads.
IF a wire service "costs" you money, for heavens sake, give it up already.
IF a wire services "makes" you money, for heavens sake, give it up already!

 

[Joe Mioux]

Sorry. didn't mean to let this subject slip. We've been alittle busy.

Joe, got to say, I'm kinda in agreement with TOTO here. What you are advocating is that you are subsidizing the labor aspect of incoming wire business with with revenue from your local customers that are paying for your fixed costs. Now from you've said that much of your incoming is multiple orders for the local funeral home, I can well understand how delivery cost really isn't a problem for you. However, what do you tell other florists when they may be charging $8 for local delivery and after discount that becomes about $5.75 and now that they have to deliver those 3 extra orders from their one designer and the driver needs an hour and a half or more for a round trip and you're paying him $9 an hour. Isn't delivery also part of the profitability picture for wire business and isn't that driver also part of fixed expenses?

For God's sake take out what ever money you need for delivery (and if you want to skim the discount - do it, I don't care) and be done with it.

Jeez, OT, you and TOto treat this wire service business like its the only problem facing florists.

It's not.... It's in reality a very small part and in my case insignificant compared to all the other business balls I juggle. For florists who are just florists it should be even easier to manager the ws business.

Lets review.....

As long as you cover the variable costs plus the ws fees on a monthly and yearly basis, you do not have to cover all your fixed costs to earn higher net profit.

This is not Joe Mioux's rules of accounting.... It is Cost Accounting that is taught in every college in the U.S.

I wish you would start learning these lessons.

Labor is not variable. (if labor is variable then you have way too much labor anyway and you need to fire some of the dead weight in order to be more profitable, irregardless whether you are WS affiliated or not) No florist that I know is so busy every day that the designers are slaving away at their workstations 8 hours straight. That isn't reality. A few extra orders can easily be added to any designers' daily, weekly, monthly and yearly work load.

joe

 

[Joe Mioux]

Now, OT.... lets start picking nits...... This assumes you do not use a delivery service, if you do your delivery cost is 100 pct variable.


What are the fixed costs and the variable costs of delivery?

just off the top of my head, Fixed costs will included depreciation of value on the vehicle, insurance on the vehicle, license fees, property taxes, registration fees and your delivery guy's worker compensation insurance, some maintenance... ( rubber, belts, and batteries go bad whether they are used or not)....

Variable costs, include tires although they will dry rot if not used. oil changes, some maintanence, GAS, and your delivery driver's pay.

Now, tell me what these costs are for the average flower shop.

thank you

Joe

 

[Joe Mioux]

What you are advocating is that you are subsidizing the labor aspect of incoming wire business with with revenue from your local customers that are paying for your fixed costs.

NO NO NO NO NO NO......

you must be a Democrat. only Democrats think in a zero sum world....

no I am wrong. commodities traders do as well.

You assume that all designers are busy nonstop from 8 am until 5 pm filling orders. you are wrong.

You and toto are even more wrong with your assumption that if a florist chooses to fill a wire order that it means someone's local direct order will not be filled.

this is absolutely the crux and flaw of your thesis.

Ws order do not substitute or cause your floral designer to lose (broadly speaking) or not arrange any local orders. (

WS orders are an addition to sales not a substitution for sales.

is that clear enough?

I sure hope so.

joe

addendum.... the internet and our own websites are changing the ws business. Eventually and hopefully the internet and our websites will destroy OG.s and drive 100pct of the business to us. This is years off but it is happening. its' all about internet advertising now.

 

[bloomz]

Jeez, OT, you and TOto treat this wire service business like its the only problem facing florists.

It's not.... It's in reality a very small part and in my case insignificant compared to all the other business balls I juggle. For florists who are just florists it should be even easier to manager the ws business.

Damm if that ain't the truth I'll eat Joe's hat.

Three of the biggest florists I know (excluding RC) never, I mean virtualy never reject an incoming wire order and 2 of those 3 actively court every incoming they can get for their VERY large metropolitan areas. And these are very busy florists that function similar to a McDonalds at lunch hour. One of them I have visited has an employee who strictly handles wire in and out communications. These are not FWOAC's in any way shape or form.

I choose not to argue with success and think they're doing something right I should probably likely be doing.

NO NO NO NO NO NO......

You and toto are even more wrong with your assumption that if a florist chooses to fill a wire order that it means someone's local direct order will not be filled.

this is absolutely the crux and flaw of your thesis.

Ws order do not substitute or cause your floral designer to lose (broadly speaking) or not arrange any local orders. (

WS orders are an addition to sales not a substitution for sales.

is that clear enough?

I sure hope so.

joe

Probably not.

 

[Joe Mioux]

Jeez bloomzie do you think you edited my "clear enough ..." comment enough?

joe

 

[bloomz]

Probably not. :ssmoke

 

[Joe Mioux]

Probably not. :ssmoke

we will see.

 

[RC in Dayton and Cincinnati]

FTD wants a local wholesaler to deliver their FTD Flower Exchange flowers to florists. They don’t want to pay the wholesaler full value for the services because the wholesaler already has the trucks coming up from Miami, already has the coolers in place, already has the delivery staff and vehicles, and already has people in place to manage the process.

FTD knows most wholesalers are having a tough time making ends meet and have excess capacity, so they offer only a small amount for the services needed, not nearly enough to cover expenses, but the wholesaler has most of these expenses regardless, and any additional revenue, no matter how small, can contribute to the bottom line.

Is it a good idea for the wholesaler to take FTD’s proposition?



RC

 

[Joe Mioux]

FTD wants a local wholesaler to deliver their FTD Flower Exchange flowers to florists. They don’t want to pay the wholesaler full value for the services because the wholesaler already has the trucks coming up from Miami, already has the coolers in place, already has the delivery staff and vehicles, and already has people in place to manage the process.

FTD knows most wholesalers are having a tough time making ends meet and have excess capacity, so they offer only a small amount for the services needed, not nearly enough to cover expenses, but the wholesaler has most of these expenses regardless, and any additional revenue, no matter how small, can contribute to the bottom line.

Is it a good idea for the wholesaler to take FTD’s proposition?



RC

The foot is on the other shoe, Randy.

It's all about distribution and FTD needs the distribution in your example.

the wholesalers can quote any price they want for their services to FTD.

They are not bound by any WS rules regarding order fullfillment

joe

 

[bloomz]

FTD wants a local wholesaler to deliver their FTD Flower Exchange flowers to florists. They don’t want to pay the wholesaler full value for the services because the wholesaler already has the trucks coming up from Miami, already has the coolers in place, already has the delivery staff and vehicles, and already has people in place to manage the process.

FTD knows most wholesalers are having a tough time making ends meet and have excess capacity, so they offer only a small amount for the services needed, not nearly enough to cover expenses, but the wholesaler has most of these expenses regardless, and any additional revenue, no matter how small, can contribute to the bottom line.

Is it a good idea for the wholesaler to take FTD’s proposition?



RC

Isn't this kinda sorta what florists using pool deliveries is about?

 

[ivygreen]

RC, what is your opinion on the the FTD/wholesaler question?

 

[RC in Dayton and Cincinnati]

Maybe I don't explain myself well enough.

My point is FTD wants to use the excess capacity of the wholesaler. Even though the wholesaler won't be paid in full he's happy because he can earn a little extra money that can go directly to his bottom line. Although true, the wholesaler is subsidizing FTD's attempt at becoming a major competitor.

This is not unlike florists filling wire orders to fill excess capacity. They are subsidizing potential competitors.


RC

 

[bloomz]

Gee that stings.

 

[RC in Dayton and Cincinnati]

RC, what is your opinion on the the FTD/wholesaler question?

If I was a successful wholesaler I'd tell FTD NO! If they want to compete with me they can invest a couple million dollars building their own facility.

If I was a week and desperate wholesaler I may take them up on their offer for any additional revenue I could get to go towards my bottom line.


RC

 

[Joe Mioux]

Maybe I don't explain myself well enough.

My point is FTD wants to use the excess capacity of the wholesaler. Even though the wholesaler won't be paid in full he's happy because he can earn a little extra money that can go directly to his bottom line. Although true, the wholesaler is subsidizing FTD's attempt at becoming a major competitor.

This is not unlike florists filling wire orders to fill excess capacity. They are subsidizing potential competitors.


RC

O.K, so the wholesaler turns into UPS.

and the wholesaler can negotiate any price he wants for his services rendered to FTD.

this is much different than the mandated 27 pct commission and $250 member fee assessed the vendor florist.

For the wholesaler its an additional source of revenue, negotiated on his terms not FTD rules.

joe

 

[RC in Dayton and Cincinnati]

If I bought $2,000 worth of flowers but were only able to sell half of them, and if the other half were destined for the dumpster, I might sell the remaining flowers well below cost because at this point in time any amount received is better than zero. I could even say any amount of money received, however small, would go straight to my bottom line.

But I would never say it was a profitable sale, and I would not sell them to my competitor to subsidize his business at the expense of my own.

Whenever you sell your product or services to fill excess capacity or cut your losses, you should try to do it in a way that may have future benefits. For example, it’s wiser to sell excess flowers by creating a special offer for your good customers to take advantage of than selling them to your competitor for him to take advantage of.

Likewise it is better to fill excess labor capacity by creating incentives encouraging customers to buy more than by filling wire orders. When you create incentives you are building future business. By filling wire orders you are not adding any future benefit and possible aiding your competition.


RC

 

[prestonway]

If I was a successful wholesaler I'd tell FTD NO! If they want to compete with me they can invest a couple million dollars building their own facility.

If I was a week and desperate wholesaler I may take them up on their offer for any additional revenue I could get to go towards my bottom line.


RC

Conversely, if one was a successful florist, you'd tell FTD NO! If they want to compete with you they can invest a couple million dollars building their own facility.

If one was a weak and desperate florist you may take them up on their offer for any additional revenue you could get to go towards your bottom line.

So why do you fill any incoming at all, Randy?

 

[CHR]

Joe -

Right now, FTD lacks cool chain distribution. They have to rely on FedEx or other overnight services. Needless to say, the cost is high and the quality is uneven due to temp fluctuations in cold or hot environments. (Think Michigan in winter or Phoenix in summer.)

They need temperature-maintained transport and can only get it through florist trucking firms.

Those firms will not deliver to 99.9% of retailers so FTD needs wholesalers as receiving points and distribution points - for now.

Once they can establish a beach head and then grow demand through lower prices and more consistant delivery of quality product, the wholesalers won't be needed at all - except for delivery and last-minute fillins. They'll have amassed enough buyers to pay for a new local facility - with the 'help' of the local wholesaler.

I agree with RC. Let them build & maintain their own facilities if they want to 'service' 'your' market.

I feel the same way about WSs.

Did anyone notice that 1-800 is now completely out of the retail and LFC business? They make more money through BloomNet than they ever could running their own retail stores.