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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