Check your FTD statement online immediately.
All FTD member florists should download their May 2008 clearinghouse statements from the www.ftdi.com website without delay. The May statements include examples of how filling florists will be affected by FTD’s new Quality Assurance initiative to promote timely delivery of wire orders. FTD florists who receive incoming orders may be surprised to see how penalties for late responses to incoming orders are being applied.
In recent years, the late transmission of rejection notices has resulted in thousands of wire service orders not being filled, particularly around special occasions like Valentines and Mothers’ Day. Understandably, the flower buying experience is very unsatisfactory for the consumers who place orders that are not filled in accordance with their expectations. Orders transmitted through the two major wire services FTD and Teleflora, constitute a significant portion of total sales in the retail florist industry.
In mid-May, FTD announced a new Quality Assurance program to ensure that filling florists respond to incoming orders in a timely manner. FTD is to be commended for taking the initiative to address this chronic problem in the florist trade. However, it appears that the steps they have taken are tilted unreasonably in favour of large volume sending florists and order gatherers and clearly against the filling florists on whom the wire services entire system depends.
Filling florists will be subject to a $10 penalty for every order that they reject more than 2 hours after the order is posted on the Mercury Network. Florists who reject an order more than 24 hours after it is sent will be assessed a penalty equal to the full value of the order. Most significantly, florists will be charged a penalty equal to 2 times the value of any order they reject after the delivery cut-off time on the date when it is supposed to be delivered. All of these penalties will be credited to the sending florists.
These new penalties came into force on 1 June 2008. To illustrate how the penalties will be applied in practice, FTD has included in the May clearinghouse statements an itemized account of the penalties that would have been assessed on delayed rejections in the month of May. No money has been deducted from filling florists’ accounts or credited to sending florists in May. But FTD florists may be surprised to discover how significant the penalties can be, even if they have responded to all incoming orders in a timely manner.
As with so many things in life, the devil is in the details. For example, under the new policy, shops are deemed to be open from 8:00 am to 5:00 pm. Any incoming orders received after close of business MUST be rejected within 2 hours after opening the following day that is by 10:00 am, if a florist is not prepared to fill the order. A florist who responds to an incoming order with a request for more money or a message asking whether substitution of certain flowers is acceptable will be subject to the $10 penalty on that order if it is not rejected outright before 10:00 am at the filling florist’s local time. This penalty applies even if the filling florist has request clarification by the 10:00am deadline and the sender has failed to reply.
To guard against such risks, FTD recommends that florists simply reject any incoming orders that they are not willing to accept, rather than engaging in an exchange of messages with senders to see if outstanding problems can be resolved.
More significantly, florists who receive overnight orders for same-say delivery face a penalty equal to two times the value of the order if they reject the orders after final delivery cut off on the date of intended delivery. This leaves minimal time to sort out any issues such as adequacy of payment, availability of the requested flowers, or errors with regard to addresses and phone numbers of intended recipients.
For example, a florist in Halifax who receives an overnight order valued at $40 from Vancouver or Los Angeles may send a request for additional funds at 9:30am Halifax time. By the time the sender opens for business at 9:00 am PST it is already 1:00 pm in Halifax. If the sending florist does not provide a satisfactory response before the delivery cut-off in Halifax (say 2:30pm AST), the Halifax florist will be obliged to fill it or to pay an $80 penalty for rejecting the order after the delivery cut-off.
Flowers Canada Retail is concerned about the way in which the policy is being implemented --- it is entirely on the back of filling florists. Perhaps FTD would consider consulting with their member florists to develop a realistic solution to this problem. Any satisfactory solution must maintain an appropriate balance between the interests of senders and filling florists.
The wire service business model has changed drastically with growth of the Internet and the proliferation of online order gatherers, including the aggressively marketed websites operated by FTD.com and Teleflora.com. With the advent of the Internet, well-funded online order gatherers are now scooping much of the “outgoing” order business that was traditionally served by local florists. Meanwhile they depend on local florists to fill the orders they send. Sending florists and order gatherers receive generous commissions and rebates for the orders they send while local filling florists are obliged to pay substantial commissions and clearinghouse fees on all incoming orders.
The new Quality Assurance program implemented by FTD stacks the deck even further in favour of order gatherers and against the local florists who fill the incoming orders. All of the penalties for late rejection of orders are assessed against filling florists. Nothing is being done to address the problems of undervalued orders, orders for flowers that are out of season, and orders with inadequate or erroneous information about intended recipients. Likewise, nothing is being done to hold senders liable for delays in responding to legitimate requests issued by local florists before they accept or reject incoming orders.
If you are an FTD member, you may contact your FTD field rep and FTD head office to discuss and comment on the new Quality Assurance program. FTD will start assessing penalties on your June account. Additionally, access your May FTD statement online at www.ftdi.com to see how much you would have been required to pay last month had the program been in force.
Here are a few “real” examples of FTD’s Quality Assurance Program charges to Flowers Canada Retail members:
EXAMPLE 1
ABC Florist received an order from FTD on 5/28/08 at 6:04am for delivery on 5/28/08. The amount if the order was for $64.50. ABC Florist rejected the order on 5/28/08 at 10:18am. The FTD fee accessed to ABC Florist is $10.00. ABC Florist rejected the order at 10:18am. The store opens at 9am and they were attending to their corporate orders first thing in the morning. At 10:15am they started to address their incoming wire orders and rejected the above order because it was for out of season flowers.
EXAMPLE 2
ABC Florist received an order from FTD on 5/15/08 at 6:45pm for delivery on 5/16/08. The amount if the order was for $25.95. ABC Florist rejected the order on 5/16/08 at 1:42pm. The FTD fee accessed to ABC florist on this order is $51.90 (two times the value of the order). ABC florist was closed then they received the order on 5/15/08. They sent a price request for additional funds at 9:27am on 5/16/08 to the sending florist (order gatherer). They did not get a reply and ABC Florist rejected the order at 1:42pm on 5/16/08.
EXAMPLE 3
ABC Florist received an order on 5/10/08 (Saturday) at 8:05pm for delivery on 5/11/08 (Sunday). The amount of the order was for $55.69. ABC Florist rejected the order on Sunday at 1:12pm. ABD florist was closed for when they received the order after hours on Saturday. They rejected the order on Sunday within 2 hours after they opened. The FTD fee accessed to ABC Florist on this order is $111.38 (two times the value of the order).
The above examples are “real” and ABC Florist under the new Quality Assurance Program would have been accessed an additional $173.25 for the three orders.
Even, if the shop had filled the three orders totalling 146.14 they would have received 106.66 after the commission and clearinghouse fees were deducted. By charging the florists 173.25 for rejecting the orders, FTD is placing unreasonable pressure on the filling florist to fill the orders with the full knowledge that they are not likely able to meet the consumers’ expectations.
