Digital Technology Boosts China’s Flower Sales

By Joe Li

W alk into the Dounan Flower Industry Park of Kunming， Yunnan， and you will see nearly a thousand types of flowers in the market， including roses， tulips and purple orchids.

Although no flowers can be seen at the auction house of KIFA （Kunming International Auction Trading Center）， KIFA has still broken the single-day auction transaction record in Asia through electronic auction.

From traditional trading method to e-trading

Known as the flower capital of Asia， Dounan’s flowers have been sold to more than 50 countries and regions. At KIFA， each day there are more than 4.5 million stems of flowers sold at the auction center， whose auction volume accounts for about 75% of the flower auction market.

The huge LED screen of the auction house displays 18 pieces of information about flower variety， quantity， selling points and deficiencies. The purchasers can quickly push the button to buy during descending-bid auctions， otherwise they will miss their opportunity to purchase.

“Flowers are fragile goods and shall be traded quickly after collection，”said Feng Huaibin， Deputy General Manager of KIFA. The company introduced the Dutch auction system in 2022 and enabled the electronic trading of flowers without face-to-face negotiation.

“The flower growers did not accept the auction method in the first place， as they did not know the price or see the cash，” said auctioneer Chen Fei. They provided premium services， attracted the middlemen to join the auction and created an auction atmosphere.

On August 3， 2021， KIFA auctioned a total of 9.31 million stems of flowers， breaking the record of singleday auction volume. Chen Fei said that in the beginning the center had only 3 trading clocks and 300 trading seats. Now the center has 12 trading clocks and 900 trading seats. Last year about 2 billion stems of flowers were auctioned， setting the record since the opening of the center.

According to Gu Chaofei， Director of Managing Committee of Dounan Flower Industry Park， the park has actively guided enterprises to develop online e-commerce platforms， and takes various measures to enable the transaction volume and value of fresh-cut flowers help both the transaction volume and transaction value of fresh cut flowers to surpass 10 billion.

Transaction heat maps， variety ranking and proportion of flower colors…… walk into the Kunming Huayibao Technology Co.， Ltd， and any journalist would marvel at the dazzling screen of data. The staff working at the computers are monitoring the transactions at all times.

“Flowers are a romantic business， and data utilization empowers the flower business to prosper，” said Zhao Yongneng， who is in charge of Kunming Huayibao Technology Co.， Ltd. As a transaction platform that links flower growers and traders， the company has mobilized the resources of the industry chain， cut off the unnecessary procedures and provide consumers with better flower trading experiences through the analysis of transaction data. Last year the company sold 400 million stems of flowers to consumers.

Huang Lvchao， manager of the membership department of KIFA， said that big data analysis is able to guide consumption and production as well as integrate production， transactions and centralized distribution， which will provide a scientific basis for industrial policy-making， market development and production guidance.

Since the outbreak of the Covid-19 pandemic， both flower growers and traders have started to realize the importance of logistics. “In the future， the logistics system of flower trading will be more intelligent and the sales platform will become more diversified.”Gu Chaofei said that the park has allocated 290 thousand sqm of land for logistics services， which enables the sold flowers to reach the terminal market within 24-48 hours. Also， the company has upgraded their online trading system app， and introduced livestreaming platform and cloud services.

E-commerce has made flower economy bloom

As ordering flowers becomes something done more frequently in our daily lives， flower e-commerce has become something consumers do as part of self-care. Capital investment has shown market optimism for the prospect of flower e-commerce， with public demand for better lives feeling the use of flower e-commerce.

According to QCC.com， there are about 410，000 flower companies in China. From 2011 to 2019， the number of registered flower companies in China had been increasing year by year. This growth rate reached its peak in 2016， when it was 35%. The number of registrations in 2019 was the highest in 10 years， reaching 94，200. The number of registrations started to decline after 2019， and in 2021 there were 58，200 newly-registered flower companies， down by 10% when compared to the previous year.

Under the traditional circulation model， flowers are mainly traded offline. Generally speaking， after flowers are collected from flower growers， they will be traded at the trading market， primary and secondary wholesalers， and then spread to small and medium-sized cities across the country， before reaching consumers. This circulation time is too long because it causes damage to flowers. Also， each layer of wholesalers pushes up the price by 15-20%， increasing the retail price by at least 60% after excluding the expense of labor， rent and losses. This final higher costs is borne by consumers. As e-commerce channels rise in popularity， the use of networks have shortened the time of the transaction， reduced losses of flowers， and created benefits for the entire industry chain. Network technology has also helped flower growers generate income and flower shops reduce operation costs.

Since 2015， many e-commerce players have emerged in the flower business. Roseonly， Beast， 24Tidy， Flowerplus， socialbeta and other e-commerce flower players have received capital investment. According to iiMedia Research， since 2013 there have been 50 financing cases in the flower e-commerce sector.

In 2019， Taobao， JD and other e-commerce giants started self-owned flower business and city delivery services. Meituan and Ele have also opened up their flower business. Driven by these large e-commerce players， flower e-commerce has reached a new peak.

The mode of online pre-sale and offline timely delivery has made buying flowers as convenient as buying vegetables. This new purchasing chain has also meant that prices of flowers are more affordable， and wholesale buying of flowers has become popular in the community. For example， Freshhema announced the establishment of a supply chain company and worked with 14 flower growing bases in Yunnan to collect flowers from the production site； Miss Fresh adopted the direct shipment model from Yunnan and shortened the supply chain； Dingdong Maicai introduced cold chain transportation by means of vehicles， to ensure the quality of flowers.

Fresh produce e-commerce companies have achieved good results. With the transformation of consumers’flower buying habits， Dingdong Maicai’s has owned 35 flower SKUs， and the sales volume has continued to grow by more than 30% month by month； Freshhema is selling more than 70 varieties of flowers and about 100 varieties of flowers in Shanghai and Beijing.

However， according to data gathered by iiMedia research， consumers believe that there are three main problems when it comes to flower e-commerce， including the inconsistency between the order and received flowers （59.5%）， withered flowers at the time of receipt （56.3%）， and delays of flower delivery （54.5%）. Some other consumers are dissatisfied with after-sales services of flower e-commerce （29.7%） and think the e-commerce companies have not received and responded reasonably to complaints.

The above problems are also common problems of the whole e-commerce industry. Experts say that for flower e-commerce， the whole industry chain， including flower growing and collection， packaging and production and transportation， shall force technology upgrades to lower the flower loss rate and thus improve quality as well as reputation.

To further expand this market in the future， the flower e-commerce platforms shall innovate marketing methods， spread brand value through experience marketing and emotional marketing， and unlock more potential consumers.