Wake up Florists!

The following are some numbers and graphs that should let us wonder…. What happened?

Some of the big wire services are listed on the stock market, in the same token is mandatory for them to open all their financial information to the public and shareholders.  United who is listed on NASDAQ, is owner of FTD; all the financial information is public.  

In this case some of the charts are  developed from  1800FLOWERS financial information.

Here the trend is positive, which shows an improving revenue year after year.

Revenue from wire services are growing year after year, is a positive trend.

The number of florist establishments is declining year after year, a lot of florist stores are closing each year, and the number of new florist stores is very insignificant.

The florist industry market is doing pretty well, since 2009 the trend has been positive. A lot of money is in this market

Now, some fast facts:

1. The number of  florist establishment has been declining year after year.
2. The Floral Industry Market Size has been growing since 2009 after the glitch produced by the recession on 2008.
3. The revenue of BloomNet wire services has been growing year after year. Meaning that florists are creating more profits and income for wire services such as, BloomNet, FTD, Teleflora.

Questions

Why is a decline on the number of florist establishments?

Some people says, that is because florists are getting older and are retiring from business.

Others say that is because florist chains are closing branches to focus on the profitable ones. Another  reason drawn, is that young people do not want to be florist, and this is the reason why the number of new florist shops is so low.

The economists said that the main reason is because being a florist is not very profitable anymore, is better be an Order Gather than a florist, also they say that Wire Services are making more and more money thanks to the work of florists; Meanwhile, florists are not making all the money that is supposed to make.

Many florist shops are closing due to lack of profits which in the long turn lead to bankrupt.

Some say that the real reason is a mix of all the aforementioned reasons.

If there is more money in the market, why more florist establishments are closing?

How the Wire Services Companies are making more and more money each year from florists?

How  the Wire Services Companies  are making more money with less and less florist establishments?

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1*    1800FLOWERS.COM, INC. Annual report, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012.

2*    1800FLOWERS.COM, INC. Annual report, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012.

3*   County Business Patterns, Department of Commerce, U.S. Census Bureau, Released 2013.

4*   US Bureau of Economic Analysis, personal consumption Expenditures by Type of Product, January 31, 2013 Revision 


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Young People do not want to be a Florist

Young People do not want to be a Florist

After a lot of conversations with young people, who are currently on their last year of high school or enrolled on college, we believe that there are some important points to share today.

The excitement in a career of florist seems to have faded. If one asks about his potential preferred job, hardly any young guy will name florist as his first choice; even, the next potential generation of florists who are supposed to relieve their florist parents are opting for other career alternatives; they are not seeing big profits in the business. The opinion is partly created because big wire services like Teleflora, FTD or 1800Flowers are the big tycoon who marks a very high price and fees for the floral software, hardware and services that is supposed to help florist to obtain a formidable profits; but the true is that florist are perceived as a mere employees and very dependent of wire services companies. These biggies gather most of the orders and the florists just fulfill those orders. The big wire services and technology providers like Teleflora, FTD and many more provides expensive software and services that becomes a hindrance for the young guys who think of venturing into a florist business as they lack the capital to give competition to the leaders.

The florist business does not remain all the same like it was earlier, now profits are declining;  meanwhile the big investment on the high end software and florist appliances like refrigerator etc, are big enough for the starters to create a niche for themselves in comparison to any other business or profession. Moreover, it is obvious that the youth of today does not want to participate as they see, every florist using the same products with very similar advertising strategies and even related and easily comparable websites like any Mac Donald’s Franchisee but it is the high prices in software, wiring fees and unbalanced profit sharing, that have been set by the leading Wire Order Companies that makes the young people think more than once before initiating a business. This is a big entry barrier for young entrepreneurs.

Interference of the South Asian Countries

While thinking of venturing into any business, a proper planning is very important and a genuine mindset and purpose for getting into it. But with the interference of Order Gathers from the South Asian Countries like India Pakistan and Bangladesh, the florist business hardly has any scope for the new comers. The overseas guys who seem to be “very smart” just set up a website at a low cost and get all the orders across the globe and let alone the local florist do the hard work at a nominal price, everything with the  Wire Order Companies complicity. In this way, the so called smart guys reap in the commission benefit at a huge margin. In the florist sector, the Order Gathers are in huge and increasing numbers who affect the florist business very badly by killing the entire florist market and reducing the value of the florist endeavor

Occasions affecting the Florists

The work of a florist involves several aspects and in depth understanding of the customer’s need. There are many intricate details in making of a flower arrangement. Many different types of materials are used which include green or dried flowers, silk etc.  Floristry is an art and a creative profession. Besides the flower arrangement, a florist has to understand the occasion like wedding, funeral, and birthday and so on.  He should have an understanding of mother’s day, teacher’s day, and Thanksgiving Day, et al. The most important skill of a florist is his ability to assist people in expressing their feelings through proper selection and flower arrangements.

But it is very often seen that with the increasing number of occasions every now and then throughout the year, the event planners are doing great business instead of the florists. Every other occasion requires flowers which are an important part of the occasion but the people are more interested to hire the event planners to set up the entire event rather than appointing the florists for the work. Thus, these florists “again” have ended up being just mere employees appointed by event planners; a lot of times event planners trying to avoid florist costs,  buy the flowers directly from wholesalers or simply they go to  the local supermarket to serve the purpose of flower arrangement required in the event and keep the florist totally out of the process. The florists hardly get their due respect that they deserve with the event planners coming in between and making the florist, a third party.

To retain the youth in the florist business and give them a boost for being one, it is very important to eradicate the negativity of the business. With the use of advanced technologies and tools, new ideas should be implemented so that the customers can conveniently buy flowers as per their requirements through sophisticated and easy to browse web pages, Facebook stores, mobile commerce and so on and never let the order gathers let down the value of the business through their cheap earning techniques. The elimination of the order gathers can show better profit margins.

Therefore, if the young entrepreneurs have to set up their florist business it is very important to get technological software features and services at the best and affordable rates with better system for direct negotiation like Direct Florist to Florist Transactions. The eradication of the order gathers is also very vital; if a florist wants to obtain better profits, the idea here is that a client buys directly to a local florist, meaning no third parties involved. It is also required to make better differentiated websites with handy web-tools for all the florists to uplift the florist sector in a better way and bring in the positivity of the business back in place with new generations adding their flavor to florist business.

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Florist Business Methods, THE TRUE. Part 3

Continuing the last post Florist Business Methods, THE TRUE. Part2; today we will see the remaining Florist Business Methods which have been used in order to send flowers to another part of the nation:

F. Direct Shipping. 

G. Direct Florist to Florist.

H. Direct order.

I. Marketplace.

Note: we are going to assume that the Originating Florist (OF) is located in Charlotte, NC; the Filling Florists (FF) is located in LA, CA, and the usual Order Gather (OG) additional fees of $9 - $15 are not charged.

F. Direct Shipping.

The OG or Wire Service Order Gather service sends overnight boxed flowers to the receiver, using for this purpose courier services like FedEx, UPS and DHL among others. The flowers come directly from their flower storage and logistics facilities; this is called “Direct-Shipping”. This process is far more lucrative for the OGs and at the same time vastly more intrusive on the retail community as it completely cuts the florists out of the operation. 

With Direct Shipping the flower shipper get all the money paid by the customer, and the receiver obtains an arrangement evaluated on $60 to $90 from the original payment of $100; all depends if the box of flowers does not have any delays in their transit, logistic problems, refrigeration shipping issues etc. Also the receiver has to deal or create an arrangement by himself with these boxed flowers but, not always the receiver is willing to deal with that.

Local Originating Florist (OG) and Filling Florists (FF) are eliminated here, meaning neither no profits nor sales for them.

G. Direct Florist to Florist.

Customers buy from his local florist he pays $100; the local Originating Florist (OF) get between $18 to $22, he uses phone calls or fax in order to place the order with the filling florist. The filling florist after subtracting delivery cost and financial fees gets $71 to $77; at the end the receiver obtains an arrangement evaluated on $71 to $77 from the original payment of $100. In this way the florists can get better profits due to the elimination of the middle men known as order gathers and/or wire services.

This model is one of the best for the filling florist, 22% profits, and the best one for the originating florist in terms of profits, 77%, but exist the cumbersome process for the Originating Florist (OF) to find the correct filling florist, deal with the florist, setup the payment method, value etc. this process can not be so easy because is not a standard method and each florist (originating and filling) can have different politics and techniques to process and accept orders, setup prices, delivery charges etc. 

H. Direct order.

The customer contacts directly the filling florist, by far this is the best one of the models, the customer receive all or most of the promised value of his order, and by the same token the filling florist get the maximum profit because he does not have to split it with OG, the Originating Florist (OF) and the wire services and all the cost associated with them. 

Many times the customer goes to his local florist in order to allow them to handle his order. On the other hand, most of the customers seek for local filling florist on yellow pages and/or web search engines when they want to send flowers to another area; but, here is a drawback, customers after seek using yellow pages or/and web search engines and without the knowledge about how to disguise Wire Services Order Gather and Order Gathers from real brick and mortar filling florist; frequently, their orders finish on the system of Wire Service Order Gathers, Order Gathers, and maybe but not frequent in marketplaces.

I. Marketplace.

Lately a new form of flower’s commercialization had been implemented; is akin to eBay service does. This marketplace is an internet platform that allows a local florist to upload his products, local zip codes of delivery coverage; setup his own prices, even, the florist can create a storefront on this market place.

On the process, the customer arrives to this web marketplace; there he buys flowers that will be fulfilled by his chosen florist. The marketplace gain between 10% and 20% for administration, SEO (search engine optimization) and transaction fees on every order and the rest of the money goes to the fulfilling florist. This model is very good for the filling florist, but at the same time this service is comparable to an Order Gather service with the difference that the filling florist roll is very active here, rather filling florist profits are very attractive; but, on other hand, the clients that should go directly to the filling florist website are getting attracted to the marketplace website. Some of the percentage of money made by the marketplace in each transaction is designated to a search engine optimization leaving the filling local florist website hooked in some sort of disadvantage when a customer performs a search in any web search engine; as time passes the website of the florist will fade off from search engines or have to compete very hard against the marketplace trying the get relevant positions on the search results. Many times the OG joins this services only using the incorporation information, but not necessarily having a brick and mortar presence.

More info about some negative facts about marketplaces. 

As aforementioned before, it is understood that the most profitable system for local filing florist is H. Direct order. By the same token, the most profitable system for local Originating Florist (OF) and local filing florist together, is G. Direct Florist to Florist.

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Florist Business Methods, THE TRUE. Part2

Continuing the last post Florist Business Methods, THE TRUE. Part1;Today we will see the following Florist Business Methods which have been used in order to send flowers to another part of the nation:

A. Traditional wire service method.
B. Alternative Wire Service method.
C. Order Gather (OG) using wire services.
D. Order Gather (OG) using filling florist.
E. Wire Service Order Gather (WSOG).

Note: we are going to assume that the Originating Florist (OF) is located in Charlotte, NC; the Filling Florists (FF) is located in LA, CA, and the usual Order Gather (OG)additional fees of $9 - $15 are not charged.

A. Traditional wire service method.

Costumer buys from his local florist he pays $100, the local florist uses the wire service network in order to find a florist who fulfill the order in the location where it is supposed to be delivered, the local Originating Florist (OF)gets $20. The wire service takes $7 for fees and costs and additional $1.5 for Transmission Fees (TF) for a total of $8.5. The filling florist is supposed to get $70 to $73 but, after subtracting delivery cost and transmission fees he only gets $61.5 to $66.5; at the end the receiver obtains an arrangement valuated on $61.5 to $66.5 from the original payment of $100

Originating Florist (OF) gains profits, wire service gains profits, and filling florist gets “profits”, but as the time passes the filling florist’s profits keeps declining because the wire services costs and fees are too high. The filling florist only obtains 61.5% to 66.5% from the total of the transaction.

B. Alternative Wire Service method.

Costumer buys from his local florist; the local florist uses the alternative wire service network in order to find a florist who fulfills the order in the location where it’s supposed to be delivered. Here the originating florist, the fulfill florist and the wire service take their profits from the transaction.

The system shows that the filling florist receives 80% of the money and the Originating Florist (OF) receive 20% up to here everything looks so good. The filling florist gets his 80% but the originating will have to pay the cost of the transaction that is $4 for a web order or $7 for a phone order. For example; in an order of $100 the Originating Florist (OF) receives 16% for web order or 13% for a phone order. If the order were of $50 the originating will receive 12% for web order or 6% for a phone order, this method only makes sense for an Originating Florist (OF) if they transmit an order of $350 or more in order to try to reach, with a 18.8%, the commission paid is by the regular wire service of 20%; consequently the Originating Florist (OF) is not making satisfactory profits on this model here.

C. Order Gather (OG) using wire services.

Customer buy from OG, OG takes the consumer’s money and treats the order as a commodity, they use wire service network in order to find a florist who fulfill the order. The wire service takes $7 for fees and costs and additional $1.5 for Transmission Fees (TF) for a total of $8.5. The filling florist is supposed to get $70 to $73 but, after subtracting delivery cost and transmission fees he only gets $61.5 to $66.5; at the end the receiver obtains an arrangement valuated on $61.5 to $66.5 from the original payment of $100. The OG, besides his profit of minimum $20, could be subject of incentives from the wire service company, incentives like Rebates for volume of orders in their wire network (the minimum rebate is $3), loyalty rebates, etc.

At first glance it can be inferred the following: the filling florist does not have an excellent profit in this model, because he has to share with OG and Wire service a big chunk of the money obtained from the customer. Local Originating Florist (OF) is eliminated in this model, so his customer was directed toward OG bypassing the local originating florist, meaning neither no profits nor sales for him. For OG is a wonderful model of profits. For Wire services is a good deal because they are getting a lot of orders without any investment on marketing and advertising due to the fact that this expenses are performed by the OG.

D. Order Gather (OG) using filling florist.

Customer buys from OG; OG takes the consumer’s money and treats the order as a commodity, shopping around for the lowest price for fulfillment from the florists serving the market of the intended recipient. The OG do not uses wire services eliminating a link in the chain, increasing in this way his profit; he can gain between $24 and $40. The filling florist after subtracting delivery cost can get only $53 to $71; at the end the receiver obtains an arrangement evaluated on $53 to $71 from the original payment of $100.

At first glance the filling florist does not have an excellent profit in this model; also, here is a price war where the cheaper filling florist obtains the order from the OG, and most of times without realize that they are filling the order at loss. Clearly the party that has the advantage here is the OG.

E. Wire Service Order Gather (WSOG).

Customers buy from Wire Service Order Gather (Wire Service main website, Wire Service alternative websites or 1800 phone lines), they (WSOG) use his own wire service network in order to find a florist who fulfill the order. Wire service takes his profit and charges a fee for his service and is a win-win model for a wire service. This model was born as a counter measure against the order gathers, but turns in the most lucrative model for wire service.

The WSOG takes $20 commission plus $7 for fees and costs and additional $1.5 for Transmission Fees (TF) for a total of $28.5. The filling florist is supposed to get $70 to $73 but, after subtracting delivery cost and transmission fees he only gets $61.5 to $66.5; at the end the receiver obtains an arrangement evaluated on $61.5 to $66.5 from the original payment of $100. The Wire Service Order Gather gives to the filling florist the same treatment on profits, (see A. Traditional wire service method.), that they do when an Originating Florist (OF) is involved in the process honoring in this way his famous sentence “We do not compete against our members”.

At first glance the filling florist does not have an excellent profit in this model. The Originating Florist (OF) is eliminated; but, in another hand the Wire Service Order Gathers gain good profits in this model; this is the best model for Wire Service Order Gathers with 28.5% of profits.

Go to part 2,  Florist Business Methods, THE TRUE. Part3



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