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War of the Roses

Independent local florists have been forced into intense competition with Internet suppliers

Email icon  Bkeogh4@bloomberg.net

For most of his 35-year career as a florist, Mark Smith was perfectly content cutting and arranging roses, assembling gift baskets of fruits and flowers, and artfully crafting bouquets for special occasions. But that changed in recent years as the Midland, Michigan-based florist—working out of the same shop his grandfather opened in 1947—witnessed growing consumer complaints about overpriced yet shoddy flowers, deceptive marketing practices by fictitious florists, and dwindling numbers of professionals in the industry.

To spotlight the problems, Smith and others began policing the industry, by setting up websites, like floristdetective.com, that ferret out deceptive practices.

“We are career florists who care about the integrity of the industry,” Smith said. “It is our future, and the future of flowers delivered by local florists depends on remaining honest and reliable.”
A modern-day War of the Roses is roiling the $20 billion floriculture industry. It pits an improbable army of small local florists against national “order-gatherers,” who have increasingly inserted themselves into the mix, and large-scale brokers, who over the past two decades have turned from not-for-profit, florist-led networks into profitable international companies that rely increasingly on the Web to fill orders for local companies and carve out cuts to fill their own coffers.
Irked by high fees, last-minute orders, and on occasion, outright fraud, small florists have set up websites to highlight broker and order-gatherer misdeeds, complained to the Federal Trade Commission, and established new networking systems to link florists in different parts of the country while ensuring the florists themselves keep all the profits. And lawsuits in California and Tennessee have won settlements against out-of-state online firms that allegedly marketed their flowers deceptively, by pretending to be local, for example. At least three other states are pursuing similar cases.

National order-gatherers who misrepresent themselves as local florists is the “biggest problem frustrating the industry,” says Jennifer Sparks, a spokeswoman for the Society of American Florists. She said 18 states have laws on the books making it a crime for a company to advertise itself as a local business when it’s not.

But the online dealers—who typically aren’t florists—say they’re just trying to give customers the best deals. The brokers argue that by forwarding orders from all over the world, they are passing florists new business. Even some florists argue that the complaints are just sour grapes from those unable to adapt to the new uber-competitive marketplace.

“The structure that is in place is a very reasonable one,” says Charles Kremp, who has spent the last half-century at his eponymous flower shop in Philadelphia. He has also been a leading voice in the floral industry, as president of the Society of American Florists in the mid-1990s. “For the best florists,” he says, “it’s very easy to fill these orders in a profitable way.”

Wire services like FTD, Telaflora, and Florists Interlink arose from the need for independent florists to help local customers place orders in other parts of the country. Florists’ Telegraph Delivery was the first in 1910, when 15 retailers created a member-owned service through which they agreed to pass along orders for out-of-town deliveries. The proceeds would be split three ways: 20 percent for the order-taker, 73 percent for the florist, and 7 percent for the wire service.
But in the past decade or so, the Internet’s growth has made it easier for non-florists to enter the business, by operating dazzling web sites with colorful bouquets of flowers, and passing orders on to wire services like FTD, owned by the public company FTD Group Inc. The order gatherers typically charge processing fees and take a 20 percent cut. Florists like Smith say FTD and other wire services are affiliated with the order gatherers and turn a blind eye to fraudulent practices and deceptive advertising for the sake of profits. And the wires have put themselves in direct competition with florist members by becoming major Web retailers. That lets them collect 27 percent of the price, and inflates a typical order by 15 to 20 percent.

Responding to consumer and florist complaints, Hankins and his organization targeted Southampton, Pennsylvania-based Teleflorist Inc., which allegedly had been advertising itself as a local business in dozens of cities across Tennessee, and listing local telephone numbers. Hankins’s group convinced the attorney general to sue the firm, resulting in a $29,000 settlement, which included a $40 rebate for all 413 Tennesseans who placed orders with Teleflorist. Kremp says the Society of American Florists is working on similar efforts elsewhere, and states like Pennsylvania have passed measures that would, as in Tennessee, make it illegal for a business to misrepresent itself as a local proprietor.

But Kremp also argues what the floral industry really needs is a national marketing effort along the lines of the dairy industry’s successful “Got milk?” campaign. He’s spearheading such an effort on behalf of wholesalers, retailers and growers in concert with the U.S. Department of Agriculture.

“Today the margins have been squeezed so thin … and businesses are struggling much more than they were ten years ago,” he says. “If our industry doesn’t get out there and explain the reasons people like to buy flowers, [consumers are] going to be buying cell phones” and other products on special occasions like Mothers Day.

“Most local florists want to play with the flowers, not websites,” explained Dottie Harrigan, a floral consultant in Upper Marlboro, Maryland. “Most of them are artists.”