Florists Fleeing From Third Fees
Though most florists conduct business with companies like FTD and Teleflora, these relationships seem to be more of a problem than a money maker, argues an article by Mike Schneider for the Associated Press (AP) in The Seattle Times
According to the article, florists are “Fed up with escalating membership fees and commissions, and an increasing number of florists are rejecting or reducing their reliance on third-party wire services and other businesses that gather orders from customers via ads in the phone book or on the Internet.”
In recent years, there has been a significant drop in the number of retail florists in the country. The AP states that the number has fallen “from 23,700-plus in 2001 to 21,700-plus last year, and many in the $19 billion floriculture industry think there is a direct link to the proliferation of third-party order-gatherers.”
In the article, Tom Carlson, owner of Fairview Florists in Janesville, Wis., stated, “It ends up the florist who is filling the order is having so much money deducted from the order that he is no longer operating at a profit,” Carlson stopped using the wire services two years ago, said the AP.
The floral wire-service market first started approximately 95 years ago as a go-between to help florists in different cities identify and fill out-of-town orders, according to the article. “In recent years, wire services have begun working with and encouraging third-party businesses, which advertise directly to consumers. Neither the wire services nor many of the third-party businesses are florists. Instead, they gather orders that are funneled to local florists in exchange for a cut of the order,” stated the AP.
The article stated that normally the third party service that takes an order from the wire service will get a 20 percent commission while the wire service itself will get about 7 percent, and the actual florist that puts the whole thing together and delivers it will get about 73 percent. “The florists also pay dues and fees to the wire services that can cost several hundred dollars more a month,” the article stated.
“Third-party order-takers also get a commission of up to 20 percent. In addition, many charge shipping or handling charges of $2-9 an order and receive rebates of between $4-6 from the wire services. That can leave well below 73 percent for the florists who make the arrangements,” said the AP. This leaves little room for profit for the florists.
In response to this problem, a number of florists have developed an association called the Independent Florists’ Association, which is an alternative network to the wire services.
According to the AP, the association “bypasses the wire services and third-party order-takers. Participating members, who pay modest membership dues and service fees, can choose either an 80 percent-20 percent split between the filling and order-sending florists – or allow the florist filling the order to keep all the money.
“While doing business with wire services carries a cost, the wire services spend millions of dollars on advertising, which translates into more business for florists,” said Jennifer Sparks, spokeswoman for the Society of American Florists.
“‘There are two schools of thought here. One school is that Oh, they’re taking all of my business away,’ Sparks said. ‘There are others that say They do create more flower buyers, which is good for the industry. They’re also providing me with orders I might not have had before.'”