All the sneaky ways that flower-delivery services get your order [Silicon Alley Insider]
- You've probably turned to flower delivery sites when you've needed a go-to gift for Valentine's Day.
- Chances are, you've ended up with way more items in your cart at checkout than you expected.
- Floral wires work as middlemen between the florist and the consumer, pocketing a big chunk of the florist's money.
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Following is a transcript of the video.
Narrator: Whether you wanna show someone you care, freshen up your home, or apologize 'cause you really, really messed up, everyone loves flowers, but they can get pretty pricey. Hop on a flower delivery site, and chances are you're gonna spend a minimum $50 but you gotta pay, right? Maybe it's a birthday or a holiday, but your special someone needs a bouquet to make their coworkers jealous.
Let's look at buying flowers online. In order for a dozen red roses on the week of Valentine's Day costs this much from major online retailers. Across the market, there's a strong effort to upsell. Add a vase, additional $10. Want those roses long stem? How about balloons? Stuffed animal, Godiva chocolate, delivery before noon, a $40 bouquet of roses can easily turn into $100 order. These companies have a vested interest in getting you to add extras. Why? 'Cause flowers themselves are pretty cheap.
And since flowers are most often gifts, consumers are more likely to add on other items to pad the perceived value of the gift, tacking on plush animals, chocolate, balloons, gift baskets and anything else you can think of. So where do all those add ons come from? Chances are you just bought your flowers through a floral wire delivery service. No, not floral wire, floral wire services or companies like these. They work as a nationwide network of brick and mortar florists. When you buy from any of these sites, it's actually coming from a local florist.
Floral wires began 110 years ago as a way to build a delivery network outside of a specific florist limited delivery range. It started out through telegraph's, hence the first one, Florists Telegraph Delivery Service. This was a cooperative of florists across the country. You know it today as FTD. And it stayed that way for over 80 years. It wasn't until 1994 that something changed the entire industry. FTD was acquired and converted to a for-profit company, eventually listing on the stock market in 2005.
This began an industry-wide change as independent for-profit companies created competing wire services, which you recognize today as one 1-800-Flowers and Teleflora. It also changed the focus from florist helping florists to, hey, there's money to be made here. Today wires work as floral brokers, middlemen between the florist and the consumer. Participating florists pay fees to be part of the network and to send and receive orders. The sending florist also gets a cut but a much smaller one.
Remember those add on items? Chances are, those have to do with the many acquisitions the wires have made in the last 15 years. For example, FTD has purchased florists.com, Shari's Berries, and Interflora. 1-800-Flowers has acquired flower adjacent businesses like Harry and David as well as Napco which sells flower pots and vases. As flowers became a more competitive industry, wires started to run out of their consumer base.
Remember that delivery fee you paid, there's a good chance that's going directly to the wire. Florists have reported wires pocketing up to 40% of a given order, leaving the fulfilling florist to cover the cost of flowers, vase, add ons, labor and delivery and hope that there's some profit left over.
The Bureau of Labor Statistics lists the average floor salary at $25,000 a year and jobs are expected to decline over the next 10 years. For every few florists enrolled in a wire service, there's an independent florist trying to do it the old school way. Instead of working with a wire service, they maintain relationships with other florists for long-distance deliveries. In addition, fewer people are looking for arrangements, preferring loose cut flowers, which they can find at the local supermarket.
The last piece of the puzzle are the startups, new companies like the Bouqs company and UrbanStems. These aim to disrupt the floral wires control with a new model, buy flowers directly from growers or grow and assemble flower arrangements themselves and then ship them to you via UPS or FedEx. This drop shipping method is their innovation that aims to cut out the middleman, the traditional floral giants. As floral wires began to lose profits, they became acquired by companies that were not as familiar with the industry. FTD filed for bankruptcy protection in 2019, selling parts and paying debts on 217 million dollars.
According to court filings, it struggled to merge the new businesses and then blamed customers for being not as open to delivery fees in a world of Amazon free shipping. FTD lost 6% of its business in 2018, nearly 224 million. It sold its European business Interflora to The Wonderful Company, Teleflora's parent company for only $60 million. Flower delivery services are still some of the worst-ranked industries when it comes to customer reviews and it makes sense we bring these delicate decapitated blossoms into our home and put emotional meaning into them while expecting them to travel from Colombia to our doorstep in peak condition.
People will always buy flowers, but florists need to adapt to a changing landscape if they don't want to get snipped.
EDITOR'S NOTE: This video was originally published in February 2020.