I’ve been friends with Bob Rankin, owner of online florist Flowersfast, for years, and was pleased when he consented to be interviewed about the reality of the online florist industry. Here’s the result.
Q: Flowers? Aren’t there, like, a million flower shops online? What makes yours different?
We try to make our mark with ease of use, competitive pricing and excellent customer service. Our customers often remark that our site was very easy to use and the prices were better than other places they looked. And when problems arise after the sale, we look upon that as an opportunity to win their business for life by going beyond the call to make sure they are satisfied. I’m convinced that many businesses fail because they never learn the lesson that unhappy customers have the choice to take their future business elsewhere.
Q: What are some of the more unusual reasons you’ve seen people send flowers?
Recently we had a customer send flowers to a friend because her house had been burglarized. Another person sent a “sorry you got pregnant” bouquet. And then there are the oddball card messages like “Dear Patty, I am so sorry! I watched too many old movies. Please forgive your loving but stupid father.” Occasionally we get orders with card messages that are “too hot to handle” so we have to ask the customer for permission to re-word their passionate sentiments.
Q: I always have a sense that the two biggest days for florists are Valentine’s Day and Mother’s Day. Is that true, and if so, what % increase over normal orders do you see?
Mother’s Day is the biggest flower holiday, and Valentine’s Day comes in next, with Christmas and Easter running a distant third and fourth. Generally order volume is 4-5x higher than usual during the week prior to those top two flower holidays.
Q: Somewhere I remember reading that there’s a specific code that dictates what color roses you should send someone and what type of flower you should send for different occasions. Can you refresh my memory?
We have a Meanings of Rose Colors page which many people take with a grain of salt. But people should be aware that sending red roses is likely to be interpreted as a romantic gesture. Men who want to send roses to a new female acquaintance might be well advised to start with yellow or pink, and work their way up to red as the relationship blossoms. Aside from roses, the only other flowers that are typically occasion-specific are daisies for get-well and gladiolus for sympathy.
Q: On the business side, do you have a retail storefront? If so, what percentage of your orders are Internet-based? If not, how much do you think it hurts your business?
Yes, we’ve had a retail presence since before we started the website. But since FlowersFast.com had its origins in a small-town local florist shop, over 90% of our business is online. I think from a customer service perspective, it’s very helpful to have experience in the retail floral trade, working face-to-face with customers. You come to understand what they want and expect when sending flowers, and you put a more human face on dealing with problems.
Q: You’re with FTD, right? How do those telefloral companies actually work? Do you get your orders via secure server? Encrypted email? Fax?
Most florists are members of the FTD and/or Teleflora networks. These “wire services” help members find a local florist to prepare and deliver the order, and they also act as a financial clearinghouse. So instead of paying hundreds of local florists who fill our orders, we pay FTD on a monthly basis, and they pay the individual florists who actually arrange and deliver the flowers. The sending florist keeps 20% of the order total, the filling florist gets 73% and FTD takes a 7% cut to administer the program.
We run all the credit cards. FTD and Teleflora are highly competitive with each other, so they offer incentives to retain members. One of the incentives FTD offers is a 0% discount rate on credit card processing. They act as our merchant bank and credit card processor, so we pay only a 30 cent transaction fee.
Here’s the process flow: We take our orders and process customer credit cards via a secure server. Then we query the FTD member database online to find a filling florist and transmit the order data over a secure web link to FTD’s central server. FTD transmits the order to the filling florist’s computer, via TCP/IP, dialup or voice, depending on the technology available on the receiving end. We do have the option of finding a filling florist in a 4-inch thick FTD member directory and phoning the order to them, but that’s not taking advantage of automation and technology!
Q: If you’re working with FTD, don’t they dictate prices? How can you be less expensive? It’s really a classic business challenge of competing in a commodity market, isn’t it?
FTD has a suggested retail price for most bouquets, and each florist has a workbook which tells them how many stems of each flower to use, the type of container, etc. But wholesale flower prices vary by region, time of year, and phase of the moon. The reality is that the SRP’s for most of the FTD products are higher than most florists would charge for that (or a similar) item in their store, so florists almost never balk at taking an order for a few dollars less. Also, we charge $3 less than FTD’s (very high) $10.99 “service charge”, which we can afford because we don’t have FTD’s massive overhead costs.
Q: So let me get this right: the next time you send a $50 bouquet to your mother, the sending florist gets $10, the florist who actually makes and delivers the floral arrangement gets $36.50 and FTD itself gets $3.50?
That’s true, but remember that the fillng florist can still deliver a bouquet with $50 value because they buy their flowers at wholesale prices. Typical markup in the flower business is 3X (as opposed to 2X in most markets) and even higher on some flowers. Yes, the local florist makes less money on wire-ins than in-store orders, but a florist with good business sense will treat the recipient of that wire-in order as a potential new customer in their local market.
Q: So you could essentially shut down your storefront entirely and work out of a low-cost warehouse with only a small hit on your revenue stream? Why don’t you go ahead and do that if over 90% of your business is online, Bob?
We could, but my partner who manages the retail part of the business enjoys being a local florist. And as long as it’s still profitable, why not?
Q: So it sounds to me like the most profitable part of this business is being the sending florist! Is the holy grail of the floral industry to be the central sender without having to ever actually stock flowers or fulfill?
Well certainly that’s the part I like best, being a techie in the flower biz. Still, local florists make pretty good money on weddings and funerals, and without them, we’d have to make big changes in our business in order to get things delivered. So we always try to be fair to them, and everyone wins.
Q: Finally, if you could make one change to the floral industry, what would it be, and why?
I think the biggest weakness in the “flower sending” business is that we don’t have a good process in place to verify that a delivery was successful. People now are used to sending a package via Fedex or UPS, and having the ability to track it all the way to the destination. A few florists (mostly larger ones in metro areas) are tech-savvy and have the ability to send delivery confirmation back to the sending florist, but in most cases we have to take it on faith that the filling florist did what they were supposed to. So when we have a customer that wants to confirm delivery, it’s a tedious process of contacting the florist and waiting for them to get back to us. The customer doesn’t understand why it takes so long, and they become frustrated with us. But that’s the state of the art in the floral business. I’d like to see delivery confirmations become a standard, automated process. But that won’t happen until FTD and Teleflora mandate that from their member florists. Unfortunately I’m not hopeful that it will happen any time soon.
I’d like to thank Bob for his help. I’m sure we’ve missed some interesting topics, however. What do you wish we would have asked Bob about flowers and the floral business?