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Amid fierce competition, O2O biz in flowers blooms

China Daily | Updated: 2017-01-04 08:21

Amid fierce competition, O2O biz in flowers blooms

A bouquet of customized imported flowers like the one above sells for 800 yuan ($115) at Florantic. [Photo provided to China Daily]

Treating every day as your last is the secret to survive in the highly competitive florist market in Shanghai, according to Mo Chao.

Mo is the co-founder of Shanghai Florantic Network Technology Co Ltd. The six-person startup has no bricks-and-mortar store, but uses an online-to-offline, or O2O business model. Customers book flowers online and have them delivered to their door.

In 2014 spring, Mo created "Florantic" with his partner Yang Weihan as a hobby. They started the business by using preserved flowers to make customized handmade dresses for dolls.

They identified a great business opportunity in fresh flowers by the end of 2015. Then they left their full-time jobs to become fulltime florists.

Their business turned profitable after only four months in operation, with the profit margin exceeding 30 percent-a decent level to sustain a flower business. They set a revenue target of 20 million yuan for 2017.

Mo said: "Flowers are more like regular consumer goods than festive gifts, and we knew it was a good timing to catch the change."

The co-founders have both business-to-business and business-to-consumer models, or B2B and B2C models. Decorating venues for business events and banquets generates 80 percent of the company's revenue, as earning from a single event often exceeds 10,000 yuan ($1,440). But Mo suggests the future lies in individual customer deals.

The O2O business model can surpass the traditional model-in which flowers are transported from the farmer to wholesale dealers and retailers before finally reaching customers. The O2O model frees florists from the burden of shop rental, and enables them to simplify product chains, saving costs by reducing logistics procedures.

Yet, these startups are vulnerable to fierce competition. Persistence and the ability to change quickly are vital tools for a brand to last longer.

Amid fierce competition, O2O biz in flowers blooms

A man proposed to his girlfriend at a Shanghai garden well decorated with flowers from Florantic. [Photo provided to China Daily]

Florantic is unique, Mo believes, in forming an intimate long-term relations with target customers-fairly well-off people with enough disposable income to enjoy life.

Florantic collects customer life stories and every week they design a flower bouquet echoing the highlights of a particular customer story, and publish it with pictures of the weekly bouquet on its WeChat account. A bouquet is priced 199 yuan ($29). A monthly subscription of four weekly boutiques costs 699 yuan. Normally, the lowest price for a monthly subscription is 98 yuan in the market.

Mo said: "We want to show customers that flowers are not fast-moving consumer goods, but a reflection of life."

Additionally, Florantic rented an aged villa on the site of former Shanghai French Concession and renovated it into a garden to hold get-togethers for VIP customers. It has sought tie-ups with jewelry and brewery businesses. Customers can learn to appreciate jewels and enjoy beer in the romantic garden.

"The market changes totally every five months or so," said Mo. "Many florists fail to adapt to changes and perish, and meanwhile new ones are budding."

Florantic's ventures into new areas are increasing. After producing traditional Chinese festival packages of flowers and food, Mo is seeking cooperation with a café in the Shanghai New World commercial zone. The floral café will enter the popular shopping mall area and famous tourist attraction in January.

"The fittest will survive," said Mo. "And we will just go as far as we can see."

He Fei contributed to this story.

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