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Dynamic Delivery Fees in Floral

Dynamic Delivery Fees in Floral

Making the case for charging higher fees for faster delivery service.

Why do most florists still charge a flat delivery fee for every ZIP code? There is no doubt the cost of each delivery varies based on distance, time and traffic. Consumers already pay extra express priority fees with every other delivery company such as FedEx, UPS and DHL. Most people would not expect this to be any different with a retail delivery— especially one offering same-day delivery.

It is estimated that most florists can generate up to 30 percent more revenue each day by managing their delivery assets more efficiently (trucks, drivers, return ETA times, etc.. For example, studies have shown that if you offer a multiple-choice delivery option matrix to consumers at checkout for same-day delivery, 30 percent of the people will choose a faster delivery option. This, of course, assumes that you can actually provide this service, meaning that you know exactly where your drivers are and what time they will return to the store. (If your software can’t do this, get new software ASAP!)

Most florist point-of-sale systems (POS) can’t do this, and even the ones that can cannot offer this without enabling live inventory control. If you don’t know what ready-made arrangements you have on hand, or the customer does not know by looking at your website, you can’t promise a one-hour delivery option for a higher fee.

In order to capture the extra 30 percent of revenues each day, all your systems have to “talk” to each other (POS, inventory module, delivery manager, website, etc.. Systems that are not integrated can’t really make this work. This is why big companies spend millions of dollars on integrated ERP (enterprise resource planning) systems to service customers better and generate more revenue. The vast majority of flower shops we see at QuickFlora do not have websites that talk to the POS inventory modules.

The average florist collects $10,000 a month in delivery fees—about $120,000 a year. Over the course of a year, that is an extra $36,000 in incremental revenue ($3,000 per month!).

Do your delivery fees change by the hour of delivery? We did that in our stores many years back, especially on Valentine’s Day each year. It did not take long to realize that 75 percent of our V Day orders were being delivered before noon (even when the customer did not ask for it). Once we realized this fact, we started “offering” morning delivery for twice the normal “anytime” fee. Every year, 25 percent of our customers would choose the morning delivery option. It was like free money because we were not doing anything different production-wise or delivery-wise.

Maybe it’s time to rethink how you charge for each delivery. I guarantee Amazon is thinking about this every day.

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