June 2, 2017
Who is your market? If you are first starting out, anytime the phone rings, you try to get the order. If you‘ve been around a while you are starting to realize which customers you like to work with and which ones actually fit your program. There are a dozen at least ways to go.
Working with brides and DIY folks can be a real challenge. I know farms though that really love holding bride‘s hands and being involved in such a big event in their lives. At first, like most, the phone rang, we took the order. Then we started saying 20 minimum then 50 minimum but after looking at the 10 e-mails to get one order versus the one or two to get the much larger wholesale broker orders, we made some decisions. But for most, you have to start somewhere. The brides and DIY do pay a much higher price per stem so there is something to say for that market. They always pay by credit card. That‘s 3% at least off the bottom line.
The next category is florists. We love florists - mostly. There is a world of different type florists. There are the fixed weekly order florists and the special occasion florist that maybe order 1-4 times a season. There are some huge florists out there that order 1,000 plus stems but they are few and far between. This category also pays the higher pricing if ordering in smaller quantities. They require less hand holding than a bride (or her Mom-In-Law) but still take considerable time to secure the order. And they pay by credit card usually.
Next is the wholesaler. Here it becomes a little bit more complicated. Everyone thinks they are wholesalers. For us a wholesaler has to order at least 500 stems in a season to access that portion of our web site. We are considering raising that number but for now it is 500. There are wholesalers that order shipped to their storefronts and wholesalers who are more like drop shippers. They never see the flowers but only act as intermediaries. Both of these categories seem to fall into the same price range and the same amount of time necessary to make the sale. The wholesalers don‘t necessarily have a customer to buy the peonies so they are a bit more leery and a bit more demanding. The drop shipper has the sale before he contacts you. He is just trying to keep his customers happy with product where he can find it and at the best price.
There are probably a few descriptions I‘m leaving out but generally these are the most popular for Alaska peonies.
The grocery store chains come next. If you‘ve had any experience with these wonderful people, you know it can run hot and cold. An order placed on Monday of one week for 12 boxes a week for the season can be cancelled the next week without any warning. The managers of these departments seem to change each season with some stores. Getting a contract is absolutely unheard of so celebrating when an order is placed might be a bit premature. I know one farm (not Alaska peonies) with 25 years‘ experience selling to grocery chains told me one year their sales were over $100,000 to a particular store and the next year with a new floral deparment manager the sales were $15,000. We had a similar experience this year. We had an order placed last fall for this season. A new person took over and has ordered only 50% of the original order. Totally high risk and the price per stem is the lowest. But if you have a huge field and you are trying to move a hundred thousand plus stems a season, this might be the way to go for you. Just keep a lot of options open and a lot of back up in your pocket.
Taking an order from grocery chains and then not being able to ship for a 6 week period will kill your relationship. Most of these bigger users won‘t want to entertain short term relationships. Not worth their efforts. And be prepared for a lot of paperwork to get started with a grocery chain. The biggest caveat I have for this market is know your per stem cost to make a profit. It‘s tempting to take a large order thinking you can make up in volume for a lower price. However, if the price doesn‘t equate to a profit, the larger volume means larger losses. They can pay by check or direct deposit so there is the 3% you can massage to make things work. Of course they don‘t pay immediately. Thirty days is more the norm than not. So you have to have some capital to carry these accounts. Keeping extremely accurate records is a must as we have found our records were better than some market accounting. We were surprised by this. We‘ve actually received large checks that weren‘t appropriate. TemptingJ And be prepared for special requirements such as sleeves or UPC codes.
So you evolve as your farm matures. What works at the beginning becomes obsolete in a few years. I‘m hoping with 11 years under our belt we are finally settling into some sort of farm model.