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The Flower Industry Will Enter the E-commerce Era

Flower enterprises venturing into e-commerce

Lately, some Chinese flower enterprises have set up their own Internet Units and put these units in charge of constructing online platforms. To them, existing portal websites cannot satisfy their demands any more. They have set their mind to using e-commerce for future development. An online platform established by a gardening enterprise for its members has scored a great success, which has prompted these enterprises to be even more determined.

This abovementioned gardening enterprise wholesales pot plants it produces directly to its members. It puts limits on the time and quantity for online sales, and stick to the principle of openness and not finishing until products are sold out. It also guarantees reasonable prices and fresh flowers. All that members need to do is order online, and flowers will be packed right after it’s produced and then delivered to customers by the logistics center. In this way, this company can reduce unnecessary costs entailed in marketing and sales, save time, and minimize damage to products. Customers can order or replenish their stock online, which also reduces the costs entailed in going out to purchase. Through this model, the company sold over 20 million pots within a year. Its gigantic success has inspired other enterprises to do some serious thinking.

Current status of flower enterprises using e-commerce 

Some flower enterprises have begun to develop their online business. But a big portion of flower enterprises have no experience in transacting online. This has to do with enterprises’ own conditions and the products that they produce. Some flower farmers do not know how to get on the internet or even do not have a computer at all. Flower farmers who know how to go on the internet might never have thought of doing transactions online. As for enterprises that mainly do pests, due to their products, they are very cautious and conservative in using the internet to market and sell their products. Some enterprises might have had experiences in operating online, but their activities mostly are limited to releasing information online or giving feedbacks online. The proportion of flower enterprises doing real transactions online is extremely low, no more than 5%.

According to research on foreign flower companies, overseas companies see the use of instant messaging tools as very important (most companies use MSN). In communication and exchanging messages, they combine the use of telephones and the use of instant messaging tools. In comparison, domestic enterprises tend to use local IM tools when it comes to the use of IM tools, like chatting in QQ groups. Meanwhile, in enterprises in China that are optimistic about e-commerce, their employees use IM tools more for communication than telephone. At the same time, these enterprises have a complete procedure for internal communication, and widely use OA (Office Automation) Systems for daily communication and sending and receiving files.

If flower enterprises want to expand their sales channels, improve sales through e-commerce and gain more profits, they need to focus on promoting themselves to the public and building a good relationship with the public, eventually establishing a decent public company image. Right now, any big flower company has its own website. Strong enterprises in China present company`s introduction online by building their own websites. But this only stays on simple introduction to potential customers. If companies do not update the information that they put up online, e-commerce can be hindered because of outdated information. On the one hand, this shows a lack of understanding among companies’ leaders in this regard, thus a lack of support in terms of labor and energy to maintain their websites. On the other hand, because companies have not effectively integrated online resources when promoting itself, visits to their websites are few. In fact, when they promote themselves, they can cooperate with professional websites in China (like Flower World Website). In this way, they can leverage existing platforms online, and increase visits to their own websites. Some smaller companies that are not that cash-rich, can also join larger professional flower websites in China, become their members, and buy a page on existing platforms to release their contact information and introduction.

The flower industry about to enter an e-commerce era

In the flower industry, there is a special group of people—flower agents. They shuttle between various production bases and act as middlemen. Agents are, in a sense, the inevitable results as the flower industry’s development reaches a certain stage. They help producers sell their products to the market and help purchasers buy what they need. By doing so, they effectively address mismatches between production and selling brought about by information asymmetry and can improve transaction efficiency.

However, as e-commerce develops, gradually agents will not be needed in the flower industry. Due to the increasingly wide use of the internet, information can be easily collected and transparency will be improved. Producers of flowers and seedling can bypass agents and directly contact purchasers, removing middle links, improving transaction efficiency and saving costs.

Meanwhile, there’s always a limitation to agents’ reach, expertise and capabilities in collecting information. E-commerce platforms have professional teams and formidable information collecting ability, extensive networks, making them an integral part to transactions. Faced with this development trend, agents will have to transform their profession. Agents should be equipped with more expertise, better abilities in collecting and analyzing information, and advanced managerial ideologies, so as to provide their clients with more professional consulting services. It’s estimated that the number of agents in the future will decrease as e-commerce continues to develop; some agents will turn into producers.

As urbanization continues, future flower industry will be more localized, professional, and flower companies will become larger. Farmers with higher production capacity can use means of subcontracting and leasing to expand their planting. Farmers can also set up professional cooperative communities, and invest with their land. These communities should be run democratically, and accounts should be made public, in order to better run the lands. Large flower enterprises can bring their capital and technologies into rural areas. As flower production becomes more localized, professional, and flower farmers and companies expand their production, costs entailed flowers’ production and logistics will further decrease and product quality will further improve. The flower industry will also score better development. Improvement in transaction efficiency and decrease of costs become of the focus of this industry.

On the other hand, the new urbanization has created lots of potential markets. Changes in the demand of the real estate market will increase demand for seedlings and pot plants. Prompted by policies aimed at building a more beautiful China, government bodies have promulgated policies supporting energy-saving furbished house. The real estate market also has entered a new competition cycle. After all, the supply of commercial housing has gradually kept up with the demand. In the future, furnished houses and high-end houses with gardens will take up a larger portion in the housing market.

Existing problems in e-flower-business

Problem 1: weak awareness of e-commerce

The development of e-commerce is restricted by many external factors in China. This, combined with development unbalances between China’s east and west, results in weak awareness of electronic commercial development among the public. Firstly, e-commerce is a new industry that has emerged only in recent years. Companies’ high-level management cannot quickly change their traditional marketing ideologies. Secondly, e-commerce does not enjoy a favorable external environment for development. Relevant laws and regulations are still to be improved. This also leads to low recognition of e-commerce among the public. Therefore, companies still use traditional marketing to promote products. However, there are some powerful enterprises who are combining traditional marketing with online marketing.

Problem 2: the development of e-commerce varies greatly from region to region 

Due to unbalanced development between regions, e-commerce in the flower industry varies greatly from region to region. In coastal east, where demand for and consumption on flowers are high, shrewd businesspeople have set up flower gift websites. By doing so, they have satisfied the demand of city resident for improving their tastes and life quality. Additionally, they have grasped the opportunity offered by the prosperous development of e-commerce and changed to Business to Customer model. This has substantially driven down their operation costs. Most enterprises already run their business online. Such websites target random consumers, and use membership platforms to sell products. They are also good at increasing sales revenues through online activities.

At the same time, professional websites for the flower industry mostly are from Beijing, Ningbo, Hangzhou, Guangzhou, Foshan, Shanghai and other coastal areas. Among these places, in Ningbo and Hangzhou and their surrounding areas, such flower websites are mostly company websites. In Beijing, Guangzhou, Foshan and Shanghai, these websites are mostly marketing and sales websites. Yet in the west, flower companies use third-party professional websites to release their information. For example, some companies choose to become members of a third-party online platform and publish their introduction and product profiles on the online platform.

Problem 3: Narrow information channels

Unhindered information flow is necessary condition in order to realize e-commerce. For the flower industry, whoever owns the latest information, owns the business opportunity. From our analysis of the research, many flower enterprises do not have a wide range of information channels. Some depend on hearsays; some rely on local flower associations for information. The latter might get outdated or distorted information, since they obtain information form a third party. As the internet is more widely used, more and more companies have begun to realize the importance of updated information and the momentous development of e-commerce. Many enterprises join flower websites as members, and release information about their products online, like information regarding supply and purchasing requests.

Problem 4: Limited use of computers within companies

Many companies still use traditional labor to process orders in sales and production links. This not only consumes more time to process information, but also can hinder information flow due to manmade mistakes. According to credible sources, presently, most companies that produce and sell flowers emphasize the use of online platforms to improve company image and increase company sales. Over half of the enterprises plan to promptly establish their online presence through upgrading their internet infrastructure and internal online management hardware. According to research, though flower companies’ information management is limited in terms of their computer infrastructure, companies are already using various channels and means to solve related problems, and use the internet to increase sales revenue.

In addition to what has been said above, if the flower industry wants to go online, it needs to unify quality standards of flowers and seedlings. Logistics, payment, and allocation of professionals are all problems that need to be solved. It is predictable that many problems will need to be addressed in this process. Many industries do well in e-commerce. Yet the flower industry is a unique industry, and there are not many examples from which it can learn from. So the flower industry will have to explore this filed on its own. Despite the foreseeable difficulties, its charm will attract more entrepreneurs to go online.

Provide by Hortiflorexpo IPM Shanghai (Intex Shanghai)

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