10 August 2021
In the run-up to Mother’s Day, Royal FloraHolland reported a record week turnover of over 170 million euros. This achievement is partly thanks to sales through the auction clock. The average price of cut flowers went through the ceiling, writes Ruud Knorr, CCO at Royal FloraHolland, in FloraCulture International, July-August 2021.
The share of Royal FloraHolland’s clock sales declined in small steps in recent years to 40 per cent in2020. But cut flowers are still, for the most part, traded on the clock. The clock share of cut flowers in terms of turnover is 60 per cent and in terms of volume 54 per cent. These figures show that the prices for cut flowers are higher on the clock than in the direct streams.
The auction clock is a unique sales instrument proving its worth day in and day out. The clock oversaw € 1.8 billion worth of turnover last year. These transactions happened via 6,300 KOA remote buying connections divided among nearly 1,500 customers. The clock as a good sales instrument is the main reason for growers’ satisfaction with our services after reasonable financial settlement. The fact that 93 per cent of the growers supply the clock underlines its importance. Clock buyers even place the clock at number one. Of all buyers, 84 per cent are active on the clock. There is no better instrument for achieving optimal pricing. The success of the clock over the past hundred years is proof of that. Moreover, there is a transparent market environment where an enormous diversity of supply and demand comes together.
It is nice to see that the basic principles of the clock have remained unchanged in a hundred years. Nevertheless, it is necessary and vital to keep the clock constantly in step with the times and adjust it where necessary. The strength and vitality of the clock reflects in the adjustments that have been made over time, but especially in recent years. For example, KOA has not only ensured a considerable increase in the buying public, but it also ensured that the auctioning could continue last year when the capacity in the auction rooms had to be drastically reduced. That was a blessing in these very challenging times.
The dynamics of the clock require that we continuously test the auction policy against practice. As soon as necessary, we tighten the excesses policy and look at the loyalty of suppliers. An excellent example of process innovation is the growing clock pre-sales (KVV). KVV has a positive effect on price formation, and therefore, clearly adds value.
Of course, the clock does not stand alone. It is, in fact, a combination of deal-making, logistics and financial settlement. The clock thus fulfils the needs of users. We also do this by improving the reliability of information about product quality and developing a sound and straightforward complaints process. These are preconditions for a well-functioning clock. Another success factor is how and to what extent we can connect to the buyer’s business processes in the future. Fulfilment logistics is our answer.
We cherish the auction clock. Over time, much research has happened, and many plans have occurred. Before you change something, you have to be sure of yourself, of course. That also characterises our approach to Nationwide Auctioning. We have, for example, gained experience in the pilot project cut-Anthurium and at the Eelde location, and we opt for step-by-step implementation. We will make as many changes as possible in close consultation with growers and buyers. Nationwide Auctioning is a leap forward. We are investing everything in a good and soft landing.
Now that the summer vacation is around the corner, I am curious to see whether we can maintain a good flow. The clock will support the momentum.
For more industry stories, read the latest edition of FloraCulture International.