Florists losing local business to out-of-state companies

2 months 1 week 3 days ago May 14, 2017 May 14, 2017 Sunday, May 14 2017 Sunday, May 14, 2017 4:16:00 PM CDT in News
By: Kevin Ko, Nnamdi Egwuonwu and Zhongbo Wen, KOMU Reporters
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COLUMBIA - People spend billions of dollars on flowers to honor their moms on Mother's Day, but much of that money isn't going to local florists. The National Retail Federation says a full two-thirds of Americans gave flowers for the holiday last year.

But local florists are losing customers to nonlocal competitors. In fact, most of them are not even in the same time zone. Flower-ordering websites, often called “order gatherers,” have emerged as primary competitors to florists in mid-Missouri. Local floral shops say these order gatherers provide insufficient funds to complete orders and mislead consumers. 

Order-gathering websites originated from florist-to-florist wiring services that existed before the internet, according to Doug Fick, a board member of Real Local Florists, an association dedicated to establishing a voice for retail florists in North America. He said the business model was a part of a marketing strategy by popular national flower seller FTD (Florists' Trans-Word Delivery), which pushed flower promotion to the public.  

“If I were to send you a hundred-dollar order as the ‘filling florist,’ a hundred-dollar order would give me twenty dollars as my commission. You would pay FTD a seven percent fee, then you’d get sixty-three dollars to fill my hundred-dollar order. The idea behind all of this was that florist would get as many incoming orders as outgoing orders, which would balance out the losses except for the slight seven percent fee for marketing by FTD. The whole model worked as long as it was florist to florist,” Fick said.

Once the business model emphasized profits over florists, floral shops nationwide felt the effect, he said.

Data from an IBISWorld industry market report published in 2016 shows that about twenty-five percent of floral businesses have closed in the past nine years, resulting in about 40,000 employees being cut. The report noted the rising popularity of flower order websites: 

“These services have hampered profitability for industry operators, with wire services taking a cut of total profit, and forcing florists to purchase specific products to fulfill orders,”  the report said.

The current business model by wiring services fails to consider florist profit and eliminates artistic value, according to Ruth LaHue, owner of My Secret Garden in Columbia, Missouri.

“They would say it’s supposed to have these flowers in it, but they wouldn’t provide the money to be able to make it because they would take their cut out of it,” LaHue said. “The wire service mass produces a whole bunch of easy-to-make flower arrangements that they want all their flowers to look like. So, I just got tired of that.” 

Fick said big business corporatized local floral shops. 

“FTD and TeleFlora made us the McDonalds of the flower industry,” he said. “You could get the same thing, anywhere across the country.” 

Florists are also frustrated by how national companies advertise as local companies. 

Mike Moscato, owner of River City Florist in Jefferson City, Missouri, said many out-of-state websites are mistaken as local businesses.

“If you sent flowers through one of those companies to your mother here in Jeff City, your mother doesn’t know that you went from a website unless you tell her,” Moscato said. 

Gatherer sites rely on consumers’ unwillingness to differentiate between local florists and national ordering sites that deliver locally. University of Missouri business law professor James M. Niemann said the practice is an example of strategic marketing. 

“It’s giving you an appearance as being a Columbia site,” Niemann said. “It’s lawful for them to truthfully state information about their [delivery] service in Columbia, Missouri, as long as they’re not misstating that they are physically themselves present.” 

Niemann said there is no legislation that requires the websites to inform consumers whether they are local or not.  

“There are no specific laws that say if you’re a national business, and you have a contract with the third party within the state of Missouri, that you have to make such disclosures,” Neimann said. 

While Missouri does not have any laws protecting florists, the California State Assembly passed legislation in 2012 that made it illegal for any “provider or vendor of floral or ornamental products or services to misrepresent the geographic location of its business.”

The act barred the advertising practices that gathering sites typically rely on. That includes using a name to misrepresent a provider’s location, listing a local telephone number unless it is identifiable with a true address and other practices that may confuse consumers from differentiating between local florists and national delivery services. 

Niemann said such legislation could be a model for local florists. But until similar legislation is introduced, florists are finding alternative methods themselves.  

Although Moscato is still working with FTD, he plans to stop working with similar websites by the end of the month.  

“My concern is not the wire services,” Moscato said. “It’s the recipient, the customer.” 

LaHue cut all ties between My Secret Garden and all wire services in 2016. She said she enjoys being able to focus solely on her floral designs and customers.  

“We take very great pride in the artistic designs that we design here,” LaHue said. “I’m a florist because I want to make people happy. I want to help the person.” 

Fick believes florists need to progress to compete.

“The biggest thing for local florists: they have to establish their own brand," he said. "They can’t rely on wire services.”

 

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