E-commerce has become ubiquitous in China since the mid-2000s, but flower e-commerce, a special vertical under the term, hasn’t blossomed until recently.
China’s flower industry is expected to grow at an annual combined growth rate of around 20 percent with market size hitting hundreds of billion RMB by 2020, local media (in Chinese) has pointed out. Government and enterprises, however, have traditionally been the main buyers of flowers and flower arrangements. Typically used at opening ceremonies or big receptions, the number of bouquets sold in China slumped 20 percent in 2014, most probably because of the Eight-point Regulation announced at the end of 2012.
Government (33%) and enterprise (30%) flower consumption still represent a big chunk of the market, data from Daxue Consulting shows. But flower demand from individual customers has risen steadily to 37%
As an indelible part of Chinese collective consciousness, flowers have always held a privileged position representing growth, prosperity, and fulfillment. Combined with the economic boom, the country’s flower industry is growing rapidly against the backdrop of a flourishing middle class. In a country where people were struggling for basic necessities like food and clothing just a few decades ago, buying flowers is an extravagance, even only for special holidays or occasions.
While Chinese are becoming wealthier and can afford a better lifestyle, their pursuits know no boundaries. This is manifested in the fact that China is known to the world as a large buyer of luxury products, cars and more.
According to the recent articles on Captiv8, a flourist blog, it would seem that, traditional brick-and-mortar flower stores are still the major channels where people buy flowers, but weaknesses including high overhead, limited coverage, inconsistent purchasing patterns, and overstocking are all forcing the burgeoning industry to speed up its online transition.
Unsurprisingly, China’s e-commerce and O2O booms quickened the process in a big way. Since the beginning of 2013, a slew of Chinese startups flocked into the sector with their own angle to tap the market. China’s flower e-commerce industry worth RMB 16.88 billion ($2.49 billion) in 2016, expecting to hit RMB 60 billion by 2019, reports from iiMedia (in Chinese) noted.
Gifting and decorating
RoseOnly, a Beijing-based startup founded in 2013, targets high-end flower gifting market and sells rose bouquets from premium vendors. The Beast also goes for the high-end customers with their lavishly decorated bouquets and boxing. The batches from both vary from hundreds to thousands of yuan. Larger arrangements cost up to five-digit sums. RoseOnly received RMB 190 million Series C last April.
In addition to gifting, flower services are more commonly a means to beautify the space and thereby a symbol for quality life in Western countries, where people would make the purchase on a daily basis. Daily flower consumption accounts for only 5 percent of China’s total flower sales, strikingly lower than 30 percent in the US and 40 percent in Holland, according to data from Flower Council of Holland.
The popularity of flower subscription model in China is making flowers more affordable and a common part of our daily lives. The model is quite simple: set your flower preference and delivery frequency, make payment through WeChat or Alipay, then wait for fresh, custom flower arrangements to be delivered to your front door. The best part is that such flower services targeting at daily flower consumptions are never pricey. Normally, users can get four weekly bouquets for as low as 98 RMB ($14.88).
Given the market potential, it’s unsurprising to see a crowded market. Leading players include 24Tidy, the on-demand laundry startup that’s shifting to flowers, Amorflora, FlowerPlus, Reflower. The former two went public on China’s New Third Board, a Chinese share transfer system for small- and medium-sized unlisted corporations. Both FlowerPlus and Reflower announced nine-digit RMB funding this month.
Taobao, JD, and the likes are also dipping their toes in this market through their O2O units, backed by their advantages in brand and logistics. However, the budding sector still faces problems ahead in maintaining the quality of the bouquets, logistics, customer education, and more.