It was recently announced that F T D has been sold again. U nited On Line has made an offer that is expected to close in the third quater. U nited has several business units but it is best known as an internet service provider. Many analysts wonder about the connnection.
F T D operates a huge online consumer divison acting as an order broker for many other products and firms. They have zero inventory of any product and hence can make a lot of money as a middle man.
They also charge member florists substantial fees to belong to their network which average about 3% per order for most florists.
Customers are generally charged a service fee of $14.98 plus they keep 27% of each order and the above 3%. On a $50 order placed on their web site, they make about $30……….$15 service fee and 30% commission which is $15 for a total of $30.00.
The florist gets paid about $35………70% of the orginal $50. order.
There is something very wrong with that equation.
Why do consumers not see the gouging here? The guy with no inventory gets almost as much as the guy who has to buy the flowers from a grower or wholesaler, design the flowers and deliver to the recipient.
No wonder flowers at the florist shop are expensive. No wonder the florist has to cut the amount of flowers going into an order from an order broker. No wonder an increasing number of real florsits refuse to fili orders from order gatherers.
But the public does not catch on! How hard is it to find a local florist with Google? A fifth grader could do it in 10 seconds.
This is the 3rd time, F T D has been sold in the last 15 years. The last two sales made a bundle of money for the buyers as they took the company private and then back public in each case. Both made a profit of over 4 times their original investment in less than 5 years.
I guess this is the American way……………..the rich get richer and the public gets sucked in by slick advertising.