What Real Florists Can Learn From Order Gatherers

August 31, 2016 at 1:36 AM

 

Order gatherers (especially deceptive order gatherers) make the rest of us in the flower business crazy... but we can also use their most effective techniques against them.

 

Ultimately it’s not their model that makes us crazy, but the fact that they are so successful. If the order-gatherer model didn’t work and they weren’t taking orders from real florists we’d regard them as second rate conmen and give them about as much attention as we give emails from Nigerian princes asking for money. But they make their model work – taking money from real florists, short-changing their customers and giving the industry a black eye.

But, like most successful businesses, is a lot to be learned from their success. It’s not locked away behind closed doors. It’s stuff that we can see and emulate.


Sending vs Receiving and the Role of Wire Services

Arguably the biggest lesson order-gatherers have to teach is that the money in this business is in sending.

Some florists struggle with that… when they send an order they have to pay money to pay money to the wire service. When they fill an order they get money from the wire service. It sure feels like filling is more profitable.

There are a number of ways to disprove that but one jumps out when we look at the order gatherer model: If filling was profitable there big order gatherers would have their own fulfillment centers in each of the 5, 10, 20 biggest cities. If there were profits in filling they’d want those profits too.

And if there was any profit to be made they’d be in a much better position to make it. Unlike you they would not need expensive retail space, they could use much cheaper industrial space. They could buy flowers and hard goods in volume, possibly straight from the farms and manufacturers. They would pay minimum wage. And they wouldn’t have to pay any wire service fees on orders going to their own fulfilment areas – it would all be handled internally.

If there was money to be made in filling they would fill. But even with all these economies of scale they know they can’t.

With that comes a better understanding of a profitable wire service relationship: wire services should be looked at primarily (if not entirely) as a convenient and cost effective way to send orders out.

From there are two further realizations. The first is that if wire services are best used for sending orders out you only need to belong to one. If you belong to more than that you are doubling or tripling monthly membership fees for no reason.

You may also be missing out on larger rebates – if you are a volume sender your best chance at negotiating larger rebates is to send everything through one service and ask for larger rebates based on your larger volume.

It also means that whichever service you do select as your only service should be the one that offers the lowest total real cost of sending. For many if not most shops this will mean Flower Shop Network.

Again this can seem counterintuitive…. with most wire services you get a rebate when you send an order. With Flower Shop Network you pay to send an order. So yes… the cost of sending an individual order with Flower Shop Network is higher than it would be with a wire service.

But the total real cost of sending through Flower Shop Network is actually much cheaper. To make a fair comparison you have to take your winer service statement and back out all of the monthly costs of wire service participation you would not pay for a la carte (membership, directory advertising, selection guides, etc.), then subtract your rebate revenue, and then divide by the number of orders you send in a month. You will almost certainly see that your real per-order cost of sending is much higher than it would be with Flower Shop Network.

TLDR; the money in order relay is in sending, you only need one wire service to send, choose one that offers the lowest true cost of sending.

 

Pricing

Order-gatherers also use some proven pricing best practices that some florists shy away from.

The first of these is known as charm pricing – the practice of ending prices in the number nine. For example $49.99 instead of $50.00.

A lot of florists don’t like this, often because they think it’s tacky, or that nobody would fall for it, or because high end stores don’t do it.

But the research is compelling – charm pricing works. It implies value and savings and motivates spending. In fact given the choice between the same arrangement at $44 on your website or $49 on an order gatherer website the customer is more likely to pay the OG $49. The charm pricing just makes it seem like a better deal.

Some very high end brands don’t use charm pricing, but they are special. Brands like Tiffany, whose desirability and exclusivity comes in no small part from the fact they are so expensive. They don’t have to worry about comparison shopping.

If you really are that shop in your local market, if you don’t worry about comparison shoppers or competitors that undercut you then yes – you might be OK using rounded numbers. Otherwise you should definitely be using charm pricing.

And if you don’t believe it look through the rogues gallery of OG websites. You’ll see that they use charm pricing almost exclusively. And they use it because it works. Because their own ongoing A/B testing and multivariete analysis proves time and time again that it works. Remember – we get frustrated because they are so good at getting orders. If online shoppers thought the charm pricing was tacky and went back to real local florists we wouldn’t care about these guys.

Some order gatherers are also good at using Anchoring - introducing a larger price for the purpose of making a smaller price look more attractive. This is most commonly exploited by showing a regular or list price and then a special (often limited time) discounted price. Compared to the inflated regular price the discounted price seems like a great deal, and gives customers a way to evaluate the value of a product they really don’t understand.

This is aggressive and it’s probably best to not fall into a cycle of perpetual discounting. But – if you are having a sale, a Valentine's Day special, or a discount on advance orders for Mother's Day…. this is a proven and effective technique.

 

Marketing

For all their success order gatherers start at a bit of a disadvantage. They aren’t real local florists. They aren’t you. They have to pretend to be. That means they have to hustle harder.

And they do it well. They use email marketing aggressively. They send reminders.They use Google AdWords. They do all this to try and beat you to your customers.

But all of these things are available to you as well.

 

Order gatherers suck, but we can use what they do so well against them. Don’t get mad, get even.



Category: Guides