A story in the Rochester, Minnesota Post-Bulletin describes a new state law that florists apparently campaigned-for which bans non-local companies from advertising local business services (in “New law removes thorn from side of local florists“). The story reports that this new law prohibits “deceptive” advertising by companies that misrepresent their location by using a false address and “local” phone number, and it would bar “any business from advertising on the Internet or in the Yellow Pages unless they also list a physical address.”
I’ve heard florists complain about the wire services companies for many years over this very same issue. Companies such as FTD, Teleflora, Proflowers and 1-800-Flowers have long provided florists with broker services — they market themselves through many channels, both local and nationwide.
My family actually used to own a wholesale floristry service in West Texas, so I have some degree of direct understanding of how these florists feel. Many yellow pages companies, both online and print, have allowed these large, influential florist services to advertise with seemingly-local area listings. Consumers grabbing a yellow pages book or searching online for floral shops rarely can discern between the independent local florists and the ads of the brokers. Once the consumer orders flowers from the broker, they end up paying various service charges — the broker subtracts their cut and sends the order on to a local flower shop to fulfill, based upon standardized catalogs of products. Florists have long gnashed their teeth that consumers pay extra for less product, needlessly passing on money to these referral services.
I’ll confess: I’ve been a floristry industry insider, and I’ve ordered flowers both ways. I can tell the difference between good-quality flowers and bad ones, too.
You might think I’d side with the independent florists on this issue, but I don’t think it’s that cut-and-dried. Consumers honestly don’t know the difference. They select some floral arrangement that’s in-line with what they wanted for an occasion, and it’s delivered on-time, and they’re happy. It is true that when they go through the wire services they may get inferior products, but this is often due to the local florist fulfilling their order — since the local florist gets less of a cut from the order, and doesn’t get so much name-brand credit for providing it, they have less incentive to do a good job.
Let’s be clear, though: I really doubt the consumer would get cheaper service if the flower brokers all disappeared today! The prices would remain virtually the same. They might get better quality flowers, but inexperienced consumers really don’t notice the difference. They don’t recognize that their flowers might be fresher and last longer when bought from dealers directly — in fact, many consumers only purchase flowers infrequently, so they’re not going to get experienced enough to know the difference.
By-and-large, I think the broker services have provided a good marketing service on behalf of the small, local florist shops. Many of these local florists are not all that effective at marketing themselves, so affiliation with the brokerage gets them an additional stream of revenue. So, many of them complain, while also taking money from the referrals.
If the local businessmen were to market themselves more effectively, consumers might be able to find them better and more easily than finding the wire services. The wire services have also developed name brand recognition and consumer trust.
I don’t like the brokers pretending to have a local street address, but I don’t see as much problem in them claiming to provide services for a local area such as city-wide. After all, they do offer services via their affiliates. I’m not so sure that the various state laws will properly define and differentiate upon this nuance, however, and that concerns me.
Quite a number of brokerage services exist beyond florists, so this issue is far bigger in implication than the relatively small world of flowers. Companies such as ServiceMagic help broker contractors across the U.S., and there’s quite a number of national and regional brokers for everything from plumbing and roof repair to siding installation and HVAC repair.
It’s going to be very hard to police this issue — I’ve seen old, well-established companies close and sell their assets to these brokers, who then promptly continue business through what becomes a sham storefront, pretending to be the legacy business that’s always been there. I ran across this once when I hired a locksmith for my home — I called one with a local town street address, but that company was no longer in operation, and instead the phone connected me to a broker who gave the order to a locksmith who drove over to me.
I hope the states which set this law up have defined it properly, still allowing brokers to operate and advertise in cities and regions while merely limiting them from advertising with specific street addresses.
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Same argument has been applied to WalMart pharmacies vs the local Main St. pharmacy that provides a significantly greater value to patients. I recall some states, like S. Dakota, recently debating laws to prevent WalMart from putting the local Mom and Pop pharmacies out of business.
The corporate model works, it is just proven that Corporations and Brokers drive up the costs of service for SMBs.
If anything positive can be done to protect those that have assets such as property, limiting the use of physical addresses that the business “authentically” operates out of would be a huge plus to both SMBs as well as consumers.