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Friday, January 15, 2016

How Third Party Floral Middlemen CHEAT The Public

Nobody would be foolish enough to knowingly purchase PIZZA using a third party call-center middleman. But every day, thousands of people do exactly that when they purchase flowers for delivery!

And that means most flower buyers pay as much as 50% MORE than they should pay!

When we are hungry for a Pizza, chances are we will use a smart communication device to search for something like: “(mytown) Pizza,” or perhaps, “(mytown) Pizzaria,” in a few seconds, the Google (or other) search engine will display a page full of results.

There are two types of search results, “Organic” and “Paid.”

Organic results are “earned” because of a complex mix of factors found in each competing website.  Among these are relevance of the website to the search terms “Pizza” and “(mytown).”  The higher the website’s relevance, the closer the website will be to the top of the Organic list.

Paid results are pay-per-click advertising. They are often found at the top of the page. (After all, the search engine company gets paid every time a consumer clicks on an advertisement.) Thus, the consumer sees these Paid ads before he sees the Organic results.

The organic search results will include both Independent Pizzerias and National Chains, but the result IS ESSENTIALLY THE SAME. If the customer orders online, essentially 100% of the purchase price goes to the local shop. And the customer gets the same pizza – at the same price -- as he would have gotten if he had gone personally into the local shop.

The situation is completely different for flowers. If a customer types in, for example, “(mytown) flowers” or “mytown florist,” he will get a similar list of results – Paid results first; Organic results second.

This is where the similarity between Pizza and Flowers ends.

People almost never send Pizza as a gift. People almost always send flowers as a gift. And the recipient may be local to the sender, or she may be in another city & state.

Before the internet, flower gift-givers would usually place their orders with a local florist that would transfer the order over a private floral network. , At least three such networks exist: FTD, Teleflora and 1-800-FLOWERS/Bloomnet.

Running the network was expensive for all concerned. Traditionally, the Network managing company charged a monthly access fee to each florist wanting to send or receive orders to/from florists in other cities. Also, the Network charged a transfer fee of 7% of the value of each order and the sending shop received a 20% credit on the gross value of every order they sent.

These credits or charges are reconciled each month. In those days, it was fairly common for the net value of incoming orders to roughly equal the value of outgoing orders.  Customers’ needs were being satisfied.

Many sending shops, in order to get some immediate cash flow, began adding a “handling charge” of between $5 and $15.

When all the “smoke” clears, the receiving florist ends up getting paid about $0.70 for every dollar that the customer spent on flowers. And, because the sending florist also added as much as $15 for handling, the receiving florist ends up getting just a bit more than HALF what the customer spent!

But, in the “old days,” only a small percent of a customer’s orders went through these floral networks. So the negative effect was minimal, and was dealt with on a case-by-case basis if a customer complained to his local florist.

FAST FORWARD to the internet.

Consumers quickly learned that they could usually get GREAT BARGAINS buying everything from Aspirin to Zithers online.  Certainly, that should be true of flowers.

But it was not.

Both Florists and Floral network owners began advertising online. Many established separate operating companies based solely on advertising, beautiful photos, e-savvy marketing and low-cost offshore call centers.

They offered beautiful Flowers, hand-delivered by a LOCAL florist – often at ridiculously low prices. And they were TAX FREE (unlike what local florists could offer.) But the prices often did not include the Handling Charge, same-day special handling charge, Saturday delivery charge etc. All of those extra charges were kept by the sending “florist.”

Customers began to notice the *huge* discrepancy between what they were getting for their money and what they *thought* they should be getting.  And they voted with their pocketbooks.

Over the last 7 years, some 40% of the REAL florists in the US went out of business.
But these “Phony Florists” have been undeterred. As an example, I Googled the search term: "Adak Alaska Florist." The top 8 "hits" were from "florists" offering to deliver flowers for me. All of these are Call Center Floral Middlemen.

Adak is an Island near the end of the Aleutions. The Population is about 250!
Additional information about these Phony Florists can be found at the Flower Hut website: http://flowerhut.com