FTD Slaps Dual Members of Rival 1-800-Flowers.com's Bloomnet With 2% Surcharge

FTD Slaps Dual Members of Rival 1-800-Flowers.com's Bloomnet With 2% Surcharge.

In what is seen as a challenge to 1-800-Flowers, FTD has informed its real florist affiliates with dual membership in rival Bloomnet of the assessment of an additional 2% clearinghouse fee. This raises FTD?s total commissions and fees on FTD.com orders to 29% and clearinghouse fees via its florist-to-florist network to 9%.

The fee applies to all orders received for local fulfillment, including flowers and hand-delivery charges, and is retroactive back to January 1, 2006. The letter states:

?We wish to notify you that effective January 1, 2006 your clearinghouse fee will be 9%. The rate is in line with clearinghouse fees charged for some time by a competitive wire service, of which you are currently a member.?

While the letter does not specifically mention 1-800-Flowers as the ?competitive wire service?, US and Canadian Bloomnet florists have been the only shops to report receiving the surcharge penalty.

During FTD?s more than 90 year history, the company has derived its core profits from florists? clearinghouse and related services. Last year, 1800Flowers.com began an aggressive campaign to sign up local florists as members of its rival clearinghouse, Bloomnet. With a lower monthly fee structure and higher rebates for orders transmitted through its system, Bloomnet has been quickly able to grow to more than 6000 local florist members.

The letter follows a failed FTD phone campaign effort to these dual members in early December. Sales team staffers were reported as calling florists and warning of the loss of FTD controlled incoming orders while offering product and service incentives available only if members committed to quit 1-800-Flowers? program prior to the upcoming publication deadline of the Bloomnet directory.

Joint FTD and Bloomnet members will be assessing whether the benefits of both affiliations outweigh FTD?s increased expenses. With 1-800-Flowers? reporting approximately $300M in floral gift sales versus FTD?s estimated $180M for the fiscal year ending July 2005, many local florists note the Westbury NY company?s substantially higher volume. 1-800-Flowers? florist-delivered orders are spread between approximately 6000 members versus FTD?s nearly 20,000.

FTD?s florists have been able to participate in competing clearinghouse networks, such as Teleflora, without financial penalties since a settlement was reached with the US Department of Justice in 1985. That enforcement order expired on August 1, 2005.

Industry insiders question whether FTD plans a similar approach with respect to joint membership in any of its other rival florist clearinghouses.

Ironically, in areas where 1-800-Flowers lacks a local Bloomnet affiliate, orders are currently transmitted and fulfilled via the FTD network.

Order gatherers, ?online-only florists? and other non-florist selling agents with dual membership in both FTD and 1800Flowers.com are not affected by this surcharge.