WS is really not viable = we have the internet

[domineaux]

I was playing around with the numbers abit this morning and thought I'd share.

One thing that has been abit perplexing is the elaborate and difficult to understand wire service statements.

I don't think it really matters,which WS you are using.

20% goes to the sending florist - 7% goes to the WS on each order

and $150 to $200 each month goes for WS account fee.

I wish that was the end of it, but sadly no. All kinds of extras creep in.

I just created a simple Excel spreadsheet and reviewed the basics.

I used the following:

20% to sending florist
7% to WS

I used the following:

For total WS sales ONLY.

5,000---7,000---9,000--11,000----WS SALES for MONTH

1,350---1,890---2,430---2,970----WS COMMISSIONS FOR MONTH

In other words - Just based on a 27% commission for 5,000-7,000-9,000--11,000 in WS sales the commission would be 1,350-1,890-2,430-2,970 respectively.

Take a hard look at those numbers and think about a few things.

First, your profit margins are reduced by the commissions. Profit margins that really would make a difference if they were applied to your business.

It might be worth some thought to hire a person to be an sales person and pay a direct 20% commission on all the work they could bring in. The job would be commision only. All you'd need to do is give the sales person a desk and phone. I wouldn't even worry about the telemarketer "dont' call thing". I get calls at my house so often now. I know people are trying to survive.

There are plenty of companies, hotels, restaurants,event companies and others that would probably welcome an outside sales person to call on them. A really creative person could very well acquire new business in weddings and events as well.

You would also be creating a job for someone, and we all know how many people need a job. You might very well hire a very competent person to work as an outside sales person.

This may seem like old school thinking, but this may be a better way than sitting and waiting for the orders to come in. When you wait for wire service orders you are completely out of control, you are dependent upon someone else to push business to you.

If you cancel conventional WS you should make extra efforts to offset those orders. There are lower cost WS type venues, which most of us know about. The WS as we experience them are almost antique, because you can pick up the phone to the recipient's city and look up local florists by Google - enter "flower or florist" and "city name". You will get a list of florists in that community. Then pick up the phone and call one you want to use. You can give them a CC for the 80-90% of the order and you'll find most florists will be glad to cooperate. You can tell them about your company at the same time.

You can also charge your customers a small WS fee sending fee. Most people will not complain about a wire service fee.

I know this goes against tradition, but this business is so competitive and everyone is pushing so hard to make profits. The WS provide the service they provide, but do you really need them when you have immediate free access on the web to see what other florists are doing. You have a direct contact ability like we have never experienced in business before.

We plan to cancel WS the end of January and are currently making plans and putting together ideas to offset those WS orders.

IMO, the economic situation is bleak and it's not looking any better as time progresses. Doing business as usual is probably not going to work.
We're all in this soup together, getting a competitive edge will not be easy. Yet, if you are making new arrangements for new ways to improve profits and increase your business I'd say you might be a survivor.

Many shops I'm aware are still doing the status quo, and will obstinately continue to do the same. This forums is a good venue for sharing and popping of new ideas, which is what we all need ---to share ideas.

You can google us "flowers or florist" "Costa mesa,CA", or you can just Google "Flowerfusion Costa mesa CA" and you will see dozens of florists serving Costa Mesa. I'll tell you this.. If you call us and want to place an order in our community we will oblige you. We'll take your CC, discount the order 20% commision and your customer will get a very high quality arrangement and outstanding service. We'll even send you a picture of the arrangement and answer any questions you have in the process. I'm not pushing our shop here, just saying that everyone of us should cooperate in such fashion.

Making contact direct to florist via the web would eventually cause the demise of OG, because they couldn't push orders to us through the WS. As long as we are dependent upon the WS we will be enabling the OG, and losing much needed business and profits.

Yes, I realize the OG could resort to direct contact with local florists just as we can do it. Yet, if you call our shop we could basically interview you over the phone and determine whether to accept your orders. We could definitely ferret out the OG easily.

This thread is intended as a thought provoker. I think many of us would be very interested to read what others think about such a topic.

Merry Christmas ---:ghug:

 

[duanermb]

Not sure why I feel like responding to this today, (this is a little heavy for Christmas Eve) but here goes.

First of all, welcome to FlowerChat. This is a strongly opinionated and often discussed topic. I will start it off with a few key points for thought.

1. The OGs will not go away if independent florists band together. Others will always be there to fill the orders, be it a corporate entity or new independents just coming on with visions of huge order volumes. We shouldn't delude ourselves.

2. The calculations are much more involved than reading a monthly statement, and there are many intangibles that come from WS membership and sending out wire orders, like brand recognition and recipient marketing. (These are often not discussed in these threads)

3. Calling just any old florist through the net is not necessarily the best route to take, and neither is giving your customer the phone number of another florist. It forces you to relinquish control of YOUR customer's order to others. We need a way to maintain control.

4. Networks of florists are a must. Those who have large preferred fillers lists are way ahead of the game. What we need is a positively focused network that rewards good service and focuses on the individual florists, rather than gathering orders. (I believe FSN has the mindset and the tools in place to create such a network, but unfortunately all profit driven networks often have too many members per area without any type of ranking system from within)

5. You are correct that this forum and others are a starting point to eliminating the status quo. Unfortunately, often people are looking for easy answers, and there are none. We all have to learn 100 things that worked for others and pick one or two that will make sense for our own businesses.

6. Happy Holidays!

 

[domineaux]

I want to think more about the things you've mentioned to discuss in more detail.

Hopefully, others will jibe in to share.

The quicky calculations were done in about 5 minutes, so I wouldn't think of them too specifically.

Thanks for a thoughtful response

 

[Joe Mioux]

Before dumping any ws in favor of a different marketing strategy, a florist better make sure that the reduction in WS revenue will be offset by increased profitability via reduced costs or increased sales from other marketing activities.

however, a florist earning $5000 in additional sales less the commissions is probably earning additional dollars to service their Contribution Margin.

Also, i don't see any advantage to dumping the WS and hiring a Sales person who will earn 20 pct of the sale. In my mind, that spells disaster for a couple reasons. Number one: if you pay a sales person 20 pct, and your designers find out, you won't have many designers left to make all those new sales-floral arrangements. Number 2: Given the fixed and variable expenses of the a flower shop, your labor could wind up close to 50 pct of Gross Sales (considering design, office, delivery, etc labor).

Also, if a wire service is earning $5000 or more per month, why couldn't you do both, have a WS and an outside sales agent? .... just not at 20 pct commission.

joe

 

[goldfish]

I was playing around with the numbers abit this morning and thought I'd share.

One thing that has been abit perplexing is the elaborate and difficult to understand wire service statements.

I don't think it really matters,which WS you are using.

20% goes to the sending florist - 7% goes to the WS on each order

and $150 to $200 each month goes for WS account fee.

I wish that was the end of it, but sadly no. All kinds of extras creep in.

domineaux, profitability analysis of incoming orders has been discussed in this forum at least 1,000 times.

It is complicated, but not _that_ complicated.

Direct costs

First take a look at direct costs and it usually goes like this.

27% to WS and sending florists/OGs
$2 order receiving fee
~35% COGS (flowers, containers, and supplies)
$? delivery cost

Suppose you get a $50 wire-in and you charge $10 delivery.

Your total direct cost would be:
$13.50 to WS & sending florist
$2 order fee
$14 COGS (35% of $40 = $50 minus delivery)
$7 delivery cost
= $36.50

Your contribution margin = $50 - $36.50 = $13.50 or 27%. Typically contribution margin of wire-ins range from 25-35%.

Note that your actual contribution margin varies and would depend on your COGS and delivery cost. This latter point, delivery cost, is extremely important in profitability of incoming orders.

For example, you just receive a wire-in order going to your local hospital. If you already have a local order going to the same hospital, your additional delivery cost of that wire-in order is zero. Your margin then jumps to $20.50 or 41%.

In other words, the more deliveries you have in a particular area, the less cost of delivery becomes, resulting in a greater profitability for wire-in as well as local orders.

Indirect costs

Indirect costs are WS monthly fees, mercury/dove fees if any, and all other miscellaneous fees tucked in.

For a typical florist, these all add up to as much as $400 a month.

Profitability

Now that you know the contribution margin of wire-ins is 25%-35%, you can calculate how many wire-ins you need to have to break even.

Let's be pessimistic and use 25% contribution margin (you can't go any worse than that).

Now, to pay for the indirect cost ($400) with 25% margin, you would need $1,600 a month wire-ins. If the average order is $50, you need 32 orders a month.

Meaning of 'break even'

If you just break even for wire-ins ($1,600 a month in the example above), what does it mean?

On surface, you worked hard to fill those 32 orders and received absolutely zero profit. So it's not worth, right?

Not so quick, and I will tell you why.

If you quit WS, you will lose the order volume. If your order volume decreases, there will be a few negative consequences.

First, your purchasing power will decline. For example, if you are a WS member and currently purchasing $2000 flowers a week, you will be ordering less flowers after you quit WS. Cost of flowers may actually increase a little bit because of the diminished purchasing power.

Two, your delivery density (# of deliveries per town) will decline. Instead of delivering e.g., 10 arrangements in a particular town, you will be delivering, say, 7. Since the total cost of delivery will remain more or less the same, your cost of delivery per arrangement will increase slightly, which in turn decreases your profit on delivery.

In brief, as long as you are breaking even with incoming orders, you are not doing that bad IMO. If you quit WS in this situation, the immediate consequence is that your cost in flowers and deliveries will increase slightly because of the lost order volume.

 

[goldfish]

Oh I forgot to tell one more thing.

The calculation above doesn't involve labor cost.

Labor cost in incoming orders

This is actually the most important factor in figuring out profitability of incoming orders.

My position, which I still believe is valid, is this.

If your shop has 'excess production capacity', i.e., idle labor, the labor cost in filling wire-in orders should be considered zero.

For example, let's say your shop has only one designer who works from 9 to 5, no matter what.

Today is slow and she is just pretending to be working by filling water tubes, at the rate of one per minute.

Here comes a cheap wire-in, $34.99 for an ugly arr. Even if you reject it just because you think the price should be higher, you would have to pay for your designer's wage anyway.

In other words, your labor cost is fixed. There is no additional labor cost needed to fill that one cheapo order. Therefore in this situation, which is typical in 99% of florists these days, labor cost to fill wire-ins should be zero.

 

[lil_goldie]

That is a smart way to look at the labour, Goldfish.
The designer will be there anyway, she might as well be doing something.

We got over 200 wire ins this Christmas. We only belong to TF. It does cost money, however that's over 200 people who now have a great experience with our shop.

What is the cost of advertising?
Say, for example, you take an ad out in your local paper and you get 10 responses. If that add cost you $500 to run that's $50/customer it cost you to get them in the door. So you've lost your profit margin if they spend any less than $75 based on that advertisement. HOwever, if you delivery 200 arrangements with a lower profit margin, you're still making SOME money and you're gaining new customers along the way.

The cost of getting a new customer in your door is astronomical anymore. With the WS orders, you don't lose, but you don't make a ton of money.
If you look at it as an advertising cost (I think this was mentioned in another thread), then you're spending much less.

The reason I think this is a viable argument is because they have a sample of your actual PRODUCT on the kitchen table, not just a piece of paper in the trash, or a radio jingle that SUGGESTS that they come in your store.

 

[sandytf]

Oh I forgot to tell one more thing.

The calculation above doesn't involve labor cost.

Labor cost in incoming orders

This is actually the most important factor in figuring out profitability of incoming orders.

My position, which I still believe is valid, is this.

If your shop has 'excess production capacity', labor cost in filling wire-in orders should be considered zero.

For example, let's say your shop has only one designer who works from 9 to 5, no matter what.

Today is slow and she is just pretending to be working by filling water tubes, at the rate of one per minute.

Here comes a cheap wire-in, $34.99 for an ugly arr. Even if you reject it just because you think the price should be higher, you would have to pay for your designer's wage anyway.

In other words, your labor cost is fixed. There is no additional labor cost needed to fill that one cheapo order. Therefore in this situation, which is typical in 99% of florists these days, labor cost to fill wire-ins should be zero.

An important factor in determining profitability is the percentage of wire in vs. non wire service orders.

To play the devil's advocate, if you are ADDING labor in order to be able to fill the wire service orders, it works in reverse. Not only the hourly wage but vacation time, workman's comp, and other expenses and benefits paid that come along with any employee.

I'm not sure how everyone works their labor, but we don't have anyone "standing around" looking busy. If we don't have work for someone, then we don't schedule the hours. We figure our weekly labor ($'s not just hours) projections based on past years sales and adjust accordingly. We don't have a lot full time people. In most locations we have a full time mgr. and one full time desinger. Everyone else is part time so we can adjust.

If the majority of your orders are incoming wires, I think it would be hard to be profitable. If you are just supplementing with wire-ins, I think the profitability picture looks a lot better.

To me, what has changed the most and made the biggest difference with the wire services is the ratio of incoming to outgoing. Most florists used to send out a lot of orders and receive a 20% commission to offset the commissions given on incoming. Since online usage has grown, the wire services "gather" the orders themselves and the typical florist is left filling at a discount. A number of progressive florists have gone after the order gathering to offset this trend and remain viable. They are not often looked upon with favor on this forum. That actually baffles me because I admire them for seeing what was going on in the industry and doing something about it.

 

[domineaux]

My responses to you are written in red - so readers can follow the train of thought easier.

First - I tried to make a un-complicated issue of WS math. That is why I made a very simple example.

domineaux, profitability analysis of incoming orders has been discussed in this forum at least 1,000 times.

It is complicated, but not _that_ complicated.

Direct costs

First take a look at direct costs and it usually goes like this.

27% to WS and sending florists/OGs
$2 order receiving fee
~35% COGS (flowers, containers, and supplies)
$? delivery cost

Suppose you get a $50 wire-in and you charge $10 delivery.

Your total direct cost would be:
$13.50 to WS & sending florist
$2 order fee
$14 COGS (35% of $40 = $50 minus delivery)
$7 delivery cost
= $36.50

Your contribution margin = $50 - $36.50 = $13.50 or 27%. Typically contribution margin of wire-ins range from 25-35%.

Note that your actual contribution margin varies and would depend on your COGS and delivery cost. This latter point, delivery cost, is extremely important in profitability of incoming orders.

For example, you just receive a wire-in order going to your local hospital. If you already have a local order going to the same hospital, your additional delivery cost of that wire-in order is zero. Your margin then jumps to $20.50 or 41%.

In other words, the more deliveries you have in a particular area, the less cost of delivery becomes, resulting in a greater profitability for wire-in as well as local orders.


Indirect costs

Indirect costs are WS monthly fees, mercury/dove fees if any, and all other miscellaneous fees tucked in.

For a typical florist, these all add up to as much as $400 a month.

Profitability

Now that you know the contribution margin of wire-ins is 25%-35%, you can calculate how many wire-ins you need to have to break even.

Let's be pessimistic and use 25% contribution margin (you can't go any worse than that).

Now, to pay for the indirect cost ($400) with 25% margin, you would need $1,600 a month wire-ins. If the average order is $50, you need 32 orders a month.

Meaning of 'break even'

Breakeven = Fixed Costs/(Selling Price - Variable Costs)
In a small busines Breakeven should be evaluated often. Usually a monthly calculation is fine, because so many fixed costs are based on a monthly payment, rent, utilities, etc.

If you just break even for wire-ins ($1,600 a month in the example above), what does it mean?

On surface, you worked hard to fill those 32 orders and received absolutely zero profit. So it's not worth, right?

Not so quick, and I will tell you why.

If you quit WS, you will lose the order volume. If your order volume decreases, there will be a few negative consequences.

First, your purchasing power will decline. Instead of ordering $2000 flowers a week, you will be ordering less. Cost of flowers might increase a little bit because of the diminished purchasing power.

Two, your delivery density will decline. Instead of delivering 10 arrangements in a particular town, you will be delivering, say, 7. Since the total cost of delivery will remain more or less the same, your cost of delivery per arrangement will increase, which in turn decreases your profit on delivery.

In brief, as long as you are breaking even with incoming orders, you are not doing that bad IMO. If you quit WS in this situation, the immediate consequence is that your cost in flowers and deliveries will increase slightly because of the lost order volume.

I think you are counting on activity as vital to your business. You thoughts are valid of course, if that is the way you want to do business.
IMO, it is best to do less, better quality business using less of all resources.

You appear to have a large volume in wire orders, but many shops don't have your volume, nor do we. We get alot of cheaper OG orders that run orders through TF with no delivery charges applied several times a day.
We reject those orders, yet there are enough florists in our area hungry for the business they will take them. Sadly, the OG is making more money on the sale than the delivery florist.

We are in a heavily populated area with world class traffic problems. Our delivery costs are very expensive. The delivery side of our business is a major cost factor. There are still plenty of hold-out florists that will deliver cheap in or area, but I doubt they know what it actually costs them to deliver. Many florist have a mindset that for every arrangement they deliver from WS provides them and opportunity to make a customer.

I would agree that could be true, if the flower arrangements you were delivering were high or exceptional quality. We don't see that many quality arrangements coming through WS. What in the world can you proudly deliver to a customer for $35-45 delivered?

I'm serious about this, if we had an alternate florist shop that didn't bear our name it might be different. Then we could deliver all the low quality arrangements and lose none of the quality image we have worked hard to achieve.

Then there is the WS containers nightmare. Who in a small shop can afford to stock all those containers. The WS aren't working with us on generic containers. When we get a order with one of their specialty containers we cannot fill it, therefore we contact the order sender to find what is acceptable. The so-called efficiency is not there even through the TF channels to discuss the order. We do better to contact the sender if possible.

During Christmas we were ELIMINATED (chastised) byTeleflora from local advertising paid and promoted in full color brochures in local newspaoers. It seems we didn't fully participate and buy the Thomas Kinkade house and other TF containers. We had other florists in our area calling us to see, if we had any of the TF novelty containters during this Christmas season so they could fill orders.

The fact that we were excluded in the locally promoted advertisements was a major slap in the face to us. TF could have done a workaround for all their subscriber florists without much trouble. This "to me" is just another indicator of WS contempt.

You can't ignore mintaining an inventory in latex and mylar ballons, rabbits, bunnies, teddie bears and chocolates. Most WS florists probably do as we do... we find stuffed animals at TJMAXX, TARGET,WALMART and buy a sack full every now and then. Then the chocolates are another pain in the wazoo, because temperatures have to be correct for storage.

Then let's talk abour gift baskets and plants. We have to make a trip to the grocery and other novelty stores to fill those orders, because we definitely aren't set up to properly manage gift baskets. Sure, when things are slow it is easy enough to do. Yet, when you take a gift basket to a customer you filled with stuff from the local grocery do you honestly think the recipient is stupid enough to realize all in the basket is stuff he/she could have bought for 50% less with a trip to the grocery.

We wrap cellophane around the gift baskets and tie big bows on them,etc. Probably the only reason we get away it is, the recipient is rarely the one that paid for it.

Fear of loss of orders is probably a real thing for many florists, because it has been too easy to just take what comes from the WS to offset local self generated business.

Important point, if you drop WS you will need other ways to attract customers to offset any profits you possibly could lose.

If you aren't willing to take initiatives in other areas of your marketing to offset WS profits you should stay with WS.







Merry Christmas, thank you for your response

 

[Joe Mioux]

Important point, if you drop WS you will need other ways to attract customers to offset any profits you possibly could lose.

If you aren't willing to take initiatives in other areas of your marketing to offset WS profits you should stay with WS.

Why on earth do you want to offset profits? If you are contributing to your gross profit margin with WS orders the last thing you would want to do is give that revenue up..... more importantly give it to your competitor.

If you give it to your competitor, you are making their WS business more efficient by reducing the fixed cost of membership percentage over more orders.

FTR: this past Jan, I did a break even analysis on my FTD membership. My break even point was 126 orders. I received about 150 orders for 2008. Yes I was modestly profitable, but not enough to keep it. I can explain further if necessary.

joe

 

[domineaux]

Why on earth do you want to offset profits? If you are contributing to your gross profit margin with WS orders the last thing you would want to do is give that revenue up..... more importantly give it to your competitor.

It is prudent business to try to offset profits if you a drop significant part of your sales volume. It is very difficult to drop a part of your business that may be substantial in your allocation of resources, employess, stocking orders.

What are you giving up to your competitor?

If you deem the WS business unprofitable and you run your business efficiently, is it probable that your loss of WS orders is likely to be any more profitable for your competitor? Your competitor may gain volume, but if the business is unprofitable or marginally profitable for you what have you really lost?

If you give it to your competitor, you are making their WS business more efficient by reducing the fixed cost of membership percentage over more orders.

Should I care what I do or don't do for the WS? Don't think or worry about the competitor or the WS. I care less how either runs or manages their own business. I mentioned in my last posting about the contempt TF had for local subscribers in my area by excluding all, but those who bought into their Kinkade container. We all pay dues and fees, yet the WS has their own priorities.

FTR: this past Jan, I did a break even analysis on my FTD membership. My break even point was 126 orders. I received about 150 orders for 2008. Yes I was modestly profitable, but not enough to keep it. I can explain further if necessary.
joe

I think you should explain more about 126 orders, being breakeven. Is that per month, per quarter, etc. Are you counting fixed costs in your breakeven calculations? I'm not trying to ferret information about your business. I'd just like to know how you evaluate breakeven. You can use fictional numbers, if you please.

I am not saying you are wrong, because I think every business person must think and deal with things at their best.

Thanks for your response

 

[goldfish]

To play the devil's advocate, if you are ADDING labor in order to be able to fill the wire service orders, it works in reverse. Not only the hourly wage but vacation time, workman's comp, and other expenses and benefits paid that come along with any employee.

Correct.

There is a situation where the labor cost for wire-ins must be considered: a) Your shop has multiple designers and b) everyone is working at close to max efficiency (i.e., no "excess production capacity").

Let's say you have 5 designers and 20% of your orders are wire-ins.

If everyone is working at max efficiency, i.e., no idle time, then you can say one of the 5 designers is working for filling wire-in orders. In this situation, the labor cost of one designer must be considered as direct cost.

A situation similar to the above actually occurs even in a small shop during holidays. Most shops hire temp workers and many shops fill tons of wire-in orders.

Now, here's the calculation of labor cost becomes a little more complicated.

On average, labor cost as percentage of revenue is about 30% for most florists.

Recall here that contribution margin of wire-in orders, without labor cost, is only 25-35%. With labor cost of 30%, then you would think that wire-in orders becomes unprofitable during holidays.

That's actually not the case, and here's why.

When designers are working at full capacity, such as during holidays, the labor cost is way below the average 30%. This is particularly true for mercury/dove orders, because your designers are not taking phone orders, which is a colossal time waster during holidays.

Here's a crude way of estimating the labor cost during holidays.

Suppose your designer's wage is $15/hr. If she can produce, on average, 6 x $50 centerpieces per hour, the labor cost percentage is only 25/(6x50) = only 8%. This assumes that she is not working on phones.

In reality, she has to go to bathroom, some of the temp workers are very slow, and so on. But at the same time, you probably aren't paying $15/hr for inefficient workers.

So in brief, the labor cost for wire-ins during very busy holidays must be considered, but it's way less than 30%. It would be more/less ~10%.

Another important factor for holiday wire-ins is the dramatic decrease of delivery costs per order.

Instead of driving 2 hours to deliver, say, 5 arrangements, you would be driving the same hours to delivery 3-4 times more. Your cost of delivery dramatically decreases, which result in a significant increase of contribution margins.

Taken together, during holidays, the labor cost for wire-in is no longer zero (probably ~10%), but the delivery cost decreases, which mitigates the increase of labor cost to some extent.

 

[Joe Mioux]

What are you giving up to your competitor?

If you deem the business unprofitable and you run your business efficiently, is it likely to be any more profitable for your competitor?



Should I care what I do or don't do for the WS? Don't think or worry about the competitor or the WS. I care less how either runs or manages their own business. I mentioned in my last posting about the contempt TF had for local subscribers in my area by excluding all, but those who bought into their Kinkade container. We all pay dues and fees, yet the WS has their own priorities.



I think you should explain more about 126 orders, being breakeven. Is that per month, per quarter, etc. Are you counting fixed costs in your breakeven calculations? I'm not trying to ferret information about your business. I'd just like to know how you evaluate breakeven. You can use fictional numbers, if you please.

You can explain further, if you please. I am not saying you are wrong, because I think every business person must think and deal with things at their best.

Thanks for your response

in your previous post, you wrote about losing profits when dumping WS.

When you quit a WS, those orders don't go away, they go to your competitor. increased orders lowers the per unit fixed cost of membership for your competitor.

I had a $99 per month membership cost with FTD. I posted the analysis here earlier this year.

joe

 

[domineaux]

in your previous post, you wrote about losing profits when dumping WS.

When you quit a WS, those orders don't go away, they go to your competitor. increased orders lowers the per unit fixed cost of membership for your competitor.

I had a $99 per month membership cost with FTD. I posted the analysis here earlier this year.

joe

Joe you are thinking to much about the other guy. Give it up, and think about your own business.

There are 300,000,000 people in this country doing their own thing every day. You can't worry about how any of them is advantaged. Concentrate on your own situation and make the best decisions for your business.

 

[goldfish]

You appear to have a large volume in wire orders, but many shops don't have your volume, nor do we. We get alot of cheaper OG orders that run orders through TF with no delivery charges applied several times a day. We reject those orders, yet there are enough florists in our area hungry for the business they will take them. Sadly, the OG is making more money on the sale than the delivery florist.

Let's not get into the discussion of how much OGs are making, how "hungry" your local competitors are for orders, and how "sad" you feel for seeing all that. I'd love to discuss those some other time.

Here, I would like to concentrate on strictly on the profitability of wire-in orders. Nothing about morality, ethics, deception, and so on.

You made one valid point above, however.

Profitability of incoming orders depends on how many orders you are receiving. Up to some level (usually around $1,500 wire-ins a month), the contribution margin from wire-in orders are paying the WS fees. So you are not making money until the number of wire-ins reach that level.

After that point, you start making money, at the rate of 25-35 cents for every dollar you receive. In other words, every order you reject/forward will reduce your earning potential from wire-ins.

If you receive an under-value order, I suggest you think carefully before you reject. Forget about who sent the order. Resentment you might feel against certain senders would almost certainly take away objectivity from your judgment and you are the one who suffers, not the OGs you resent.

Let's say you receive $50 order from one of your favorite OGs. Your normal delivery charge is $10, leaving only $40 to fill for the order.

You then tell yourself there's no way you can make that arrangement with $40. Then your finger moves to click on 'reject'.

But wait a second.

Remember that typical contribution margin of wire-ins orders is about 30% (25-35%). What does it mean? It means that, for a $50 wire-in orders, you could waste $15 (30% of $50) before it becomes completely unprofitable.

In other words, even if you may have to add several extra stems of flowers (which might cost you ~$5) to fill that stupid order, you would be better off filing it than rejecting it.

I would agree that could be true, if the flower arrangements you were delivering were high or exceptional quality. We don't see that many quality arrangements coming through WS. What in the world can you proudly deliver to a customer for $35-45 delivered?

That is the comment I suspect you would regret later on.

As a florist, we proudly deliver anything from $1 to $1,000, which is the most expensive single arrangement we ever delivered. Price of arrangements do not bother us at all.

 

[Joe Mioux]

Joe you are thinking to much about the other guy. Give it up, and think about your own business.

There are 300,000,000 people in this country doing their own thing every day. You can't worry about how any of them is advantaged. Concentrate on your own situation and make the best decisions for your business.

I am pointing out the effects of your decision to quit a ws, not mine.

 

[concord]

I think that worked for us more back when the actual product was of our own design and not a canned WS keepsake that goes in a yard sale next spring. In my area it's difficult to get rid of keepsake products. I don't like having my name on the ugly OG / WS type bouquets that generate complaints. I'm sure some parts of the country do well with those but I get more local orders that request, "Nothing that looks FTD." I will be happy to have less deliveries and less orders when I am WS free because I do not have designers filling water tubes to keep busy. I will spend any free time working on getting more local business when I am not wasting time and money with TF.

 

[domineaux]

I am pointing out the effects of your decision to quit a ws, not mine.

Don't mean to get cross with you on this. Staying or leaving the WS is an individual choice. There are plenty of shops that will continue to embrace WS orders. They have their own priorities.

 

[domineaux]

Let's not get into the discussion of how much OGs are making, how "hungry" your local competitors are for orders, and how "sad" you feel for seeing all that. I'd love to discuss those some other time.

Here, I would like to concentrate on strictly on the profitability of wire-in orders. Nothing about morality, ethics, deception, and so on.

You made one valid point above, however.

Profitability of incoming orders depends on how many orders you are receiving. Up to some level (usually around $1,500 wire-ins a month), the contribution margin from wire-in orders are paying the WS fees. So you are losing money.

After that point, you start making money, at the rate of 25-35 cents for every dollar you receive. In other words, every order you reject/forward will reduce your earning potential from wire-ins.

If you receive an under-value order, I suggest you think carefully before you reject. Forget about who sent the order. Resentment you might feel against certain senders would almost certainly take away objectivity from your judgment and you are the one who suffers, not the OGs you resent.

Let's say you receive $50 order from one of your favorite OGs. Your normal delivery charge is $10, leaving only $40 to fill for the order.

You then tell yourself there's no way you can make that arrangement with $40. Then your finger moves to click on 'reject'.

But wait a second.

Remember that typical contribution margin of wire-ins orders is about 30% (25-35%). What does it mean? It means that, for a $50 wire-in orders, you could waste $15 (30% of $50) before it becomes completely unprofitable.

In other words, even if you may have to add several extra stems of flowers (which might cost you ~$5) to fill that stupid order, you would be better off filing it than rejecting it.

That is the comment I suspect you would regret later on.

As a florist, we proudly deliver anything from $1 to $1,000, which is the most expensive single arrangement we ever delivered. Price of arrangements do not bother us at all.

Our priorities for the kind of work we want to associate our name with are our own. We are in Orange County CA, which has a very high standard of living and household income. The customers we serve are just not into Gerbers and Carnations.

Cheap arrangements with 5 gerbers and 4 carnations in a smiley vase just won't get it done. It just doesn't work for us. In lower income areas there are plenty of florists that produce minimalized arrangements.

There are plenty of grocers, and other florists in lower income areas that will deliver and sell anything that smells like a flower. I'm not knocking those people, that is their choice.

There are large numbers of people that don't know zip about flowers or what is really beautiful or not. We've all heard the "I want a big bunch of flowers in the vase that look pretty", "I want an dozen Roses (with no idea of what a really beautiful Rose is). I do not say that to knock peoples' taste. I say that because it is a fact. How many times have you been asked to poke in more flowers in a finished arrangement because the customer thought it should be bigger (not knowing the design was ruined). In effect, I do believe there are more people that know little or nothing about quality floral arrangements than there are people that respect high quality arrangements.

I suspect your thinking is not far away from what the real world is about and wants in flower arrangements. TF, FTD, 1800 and ProF have a pretty good handle on the real market, which is evidenced in the kind of arrangements presented on their websites.

I guess I should be saying many of the orders we receive from WS, not just OG orders, are the type of arrangements we do not want to associate with our business. -- As the fellow said, "There is always that". LOL

 

[Joe Mioux]

Don't mean to get cross with you on this. Staying or leaving the WS is an individual choice. There are plenty of shops that will continue to embrace WS orders. They have their own priorities.

You brought up the point about quitting a profitable WS. I just commented.

I don't know where you read that I was advocating anyone stay or leave a WS.

However, leaving a profitable WS business in favor of hiring a sales person and paying them 20 pct was your idea.

Believe me I don't care what you do with your business. People read these threads and some try to base their decisions on what they read here.

Relying on someone else's comments without fully looking at the ramifications on one's own business could be disastrous.