05 May 2021
Zhu Yueyi, Jia Lan and Liu Minjia drive one of China’s largest flower subscription delivery businesses from their headquarter in Beijing. These three female entrepreneurs have run Reflower (Huadian Shijian or 花点时间), a pioneer B2C online flower business in China since 2015.
Reflower now serves 15 million customers every month in over 300 cities in mainland China. Rewarding its success is a fourth round of approximately RMB 100 million venture capital funding in February 2021. When asked about how the business would use the latest funding, Jia Lan said they would further invest in the supply chain, as all domestic flower enterprises are making great efforts on it. The second area is to invest in ‘bricks and mortar’ by opening more flower shops and combining services with existing online platforms to provide more choice for both online and offline customers.
With the coronavirus pandemic easing in China, daily trips within the country are back to normal. Briefly interrupting the busy schedule of COO Jia Lan, as she travelled to her next business appointment, FloraCulture International interviewed her on WeChat. This platform is the most common communication tool for business and social for more than 1.1 billion monthly users, including private and commercial accounts.
FCI: Why e-commerce flower business? What opportunities do you see in this sector?
Jia Lan: “China’s high economic growth and rising prosperity is the most prominent reason to pursue these opportunities. The average household income is continuously increasing, and Chinese people’s consumption patterns are upgrading. Flowers are no longer only a gift given on special occasions. People want to treat themselves, and flowers bring happiness to their daily life. All factors combined makes so much sense for us to decide to enter this business. We chose the right category, the suitable business model, and the perfect time to start, and the results of seizing that opportunity show in our expansion today.”
Who are your customers? Which sales channels can buy your products?
“In the first few years, many of our customers were female over 25 years old. But we have seen a change in bunches like peony, lotus, and other seasonal flowers.
The most popular sales channels in China now are live video streaming and short video platforms. We registered our live video streaming channel on Tmall (Alibaba) and have created short story films for marketing. Followers can buy our products, see the flower farms and learn flower care tips during our live video streaming. The emerging new channels bring flowers closer to people and allow them to learn more about flowers. During the pandemic, we used our video streaming channel to help growers sell excess flowers. We achieved good results.
Our customers are getting younger, so our marketing strategy is to synchronise with them and try to make things that the younger generation wants to see — making flowers vibrant, youthful, and fashionable to share on social media. Instead of thinking about educating the customers, I think it is more important to understand their needs. This awareness would be a breakthrough to better sales.”
How do you see the relationship between e-commerce and the traditional flower business? Is the internet a tool or a standalone industry?
“Selling products online is a common practice in China now. It is just another option. Some businesses can sell all their products in the traditional markets, then selling online may take more effort. For other companies interested in broadening the audience, bringing your products online is a good option. The internet has opened a lot of new opportunities. In the past, peony and other seasonal flowers were traded mainly in the traditional markets. The flowers are available for a short period. This short time was the barrier to make it a flower product for home use in China. Consumers did not have the channel to access the flowers at an affordable price. With the development of e-commerce, we manage to connect growers directly with consumers and make it much easier to sell and buy flowers. The internet could help promote your products if you find the right selling point and make the influence more significant and faster.
I think it is an inevitable trend more flower trading will happen online. Wholesalers will also do so. On the other hand, China’s flower business is developing rapidly, and consumers can buy flowers everywhere without any barrier. But the problem is, how to buy consistently high-quality flowers.
It takes time, effort and patience to develop a reputable flower business. We need to invest considerable efforts in our supply chain to deliver a good fresh flower product with consistent quality.”
With more monthly flower subscription business joining the game, also corona is a big push many companies bring their business online, new forms of online selling channels emerge, such as community group buying and selling on TikTok. The competition is harsher than ever. How does Reflower stand out from its competition?
“Standing out is more complex than ever. It requires constant improvement in all aspects of brand building, marketing, event planning and product selection. Logistics is no longer an issue in China. All the infrastructure is relatively well developed. Cold chain logistics is the next phase of development for Chinese logistics companies, which is essential to provide high quality products.”
Where do you source flowers? What grades of flowers do you need?
“Before the coronavirus pandemic, 20 per cent of our flowers came from overseas. During the last year, the number of imports has dropped to 10 per cent. The main reasons are the unpredictable flights, customs, and quarantine. Of the 90 per cent Chinese locally sourced flowers, contract growing from local growers counts for 95 per cent. We have very high-quality standards, focusing on colour, flower shape, disease preventions, proper postharvest treatment, and bacteria level in the water. We work alongside our growers to select varieties, guide their practices, and share the data we collected over the years to make the best decisions on production planning. We collaborated with Wageningen Food & Biobased Research Centre to build our postharvest standard and standardise the postharvest procedures.”
How do you regularly supply 15 million customers that are geographically divided into over 300 cities? How did you improve your supply chain?
“We built six cold distribution centres in the main transportation hubs in China, including Tianjin, Shanghai, Guangzhou, Wuhan, Shenyang, and Kunming. Flowers are checked, and postharvest treated properly and bulk packed in the farms, then transported with refrigeration trucks from farms to our distribution centres. Here, they also act as a processing factory, where we semi-automate the grading and bunch-mixing process. Automation in the Chinese flower industry on a large scale is still not a common practice. We are ahead of more of our peers in the industry.
The bunches are supplied with water sources at the end and packed in cardboard boxes. From the distribution centres, delivery trucks will send them to our customers. That means 80 per cent of our chain has temperature control. Still, the last six to eight hours distance between distribution centres and customers there is no temperature control. We outsource delivery to the major logistic service providers such as Jing Dong, Shun Feng and Zhong Tong.”
Online has proven a significant sales channel. Why are you interested in investing in offline flower shops?
“In China, 70 per cent of the flower business still operates offline. It is a big market. We cannot meet all the needs of online users—for example, time-sensitive use, flower arrangement courses, events, and weddings. Online and offline meet different customer requirements, especially time-sensitive requirements. Very few flower shops have built their supply chain as we do. Traditional flower shops are not as efficient and cannot reach so many online customers. Reflower have great potential to do well offline. We can supply efficiently to meet the variable need. Our offline flower shops will benefit from our online customer base. With the big data accumulated over the years, we can find better locations for our flower shops. Our existing supply chain can also directly benefit our flower shops.”
How do you plan to balance online and offline to make the best out of the opportunities?
“I would not call it balancing. They are complementing and benefiting each other. In our opinion, attracting customers online then offering more ways to shop is relatively easy. But we also agree, it has become more expensive to acquire customers online. In the future, acquiring customers offline is still an important channel. This consideration is another good reason why we are investing in more flower shops than distribution centres.”
China is developing at a staggering speed. What are the changes you have seen in the past five years?
“The flower industry is booming. Consumer demand is increasing year by year with a higher expectation of product quality. We are fully convinced the market will continue to grow. Data showed that the current Chinese flower e-commerce is worth RMB 36.53 billion (€ 4.65 billion) in 2020. We have faith in this industry. More people will start to buy flowers, and the market has enormous potential. There is a yearly increase of 20 to 30 per cent in both production and consumption ends. Flowers and plants in China are becoming an essential part of home decoration. Average home flower consumption is starting to catch up with Western countries. China’s home flower user market started much later, but it is evolving at an incredible speed. For more and more Chinese families, it has become common to buy flowers regularly. You could not imagine this ten years ago. At the production end, more professional growers are investing in improving quality and building their brands. We see a lot of newer varieties available. Consumers are not satisfied with knowing the common name of a flower. They want to learn about the varieties and are chasing after unique and new products to differentiate themselves from their peers. There are positive changes in the flower industry and better government policies to subsidise and promote growers to set up covered infrastructures and expand growing areas. More educated young people are joining the industry and bringing good incentives. The younger generations tend to buy flowers, which is the fastest-growing category among our customers.”
In your opinion, what can China and the Western countries learn from each other? What would you like to share with the world?
“Countries like the Netherlands are doing a very professional job, from breeding to cultivation to logistic. Everyone on the chain is focusing on its area and professionalising it. Chinese companies need to learn from this.
Internet technology in China is maturing, and there is more focus on learning consumer behaviours using big data. This focus helps Chinese e-commerce business better understand our customers. Understand what your customers desire, design products based on the desire and guide production planning. This logic would bring more efficiency to business operation.”