Dec 23, 2020|
In-Depth Report: Supply Chain and Livestreaming Bring Win-Win for JD and Flower Industry in Yunnan
by Vivian Yang
“Trust me, when the pandemic is over, someone will be waiting for you with flowers in his arms,” a florist nicknamed “Yuxi flower sister” from Yunnan province posted on her WeChat in early February when the virus started there.
Yunnan, known as the kingdom of flowers in China, is home to one of the biggest flower plantations and markets in the world. Over 70% of China’s fresh cut flowers come from Yunnan. Its flower market suffered a big blow since the outbreak of COVID-19 due to demand shortages and transportation disruptions.
But like the post of “Yuxi flower sister” showed, many Yunnan florists did not lose hope. When times were hard, China’s e-commerce platforms like JD.com wasted no time to help and demonstrated how the internet can be an effective tool for the florists to re-connect with the outside world. And beyond the pandemic, more and more florists come to realize that JD has much more to offer in empowering their business and in transforming the entire supply chain of the flower industry.
Save the flowers
When the alarming photos showing heaping flowers in Yunnan awaiting destruction were widely spread on the internet on Feb. 10, right before Valentine’s Day, JD felt obliged to take action. An internal taskforce quickly responded to the flower market’s SOS.
“We called an emergency meeting over night to discuss what to do, and in parallel reached out to both upstream flower merchants and downstream KOLs for voluntary livestream promotions,” recalled Zhaokun Ning, director of the gardening department of JD Flowers.
“Though we could not fight the virus on the frontlines, we wanted do our utmost to save these flowers as they can deliver love to more people,” said Huan Tong who is in charge of the flower business at Jingxi, JD’s social e-commerce business, noting that compared to other vegetables, fresh flowers, which are not considered necessities, faced a more severe unsalable situation during the pandemic.
Yunnan flowers awating destruction during COVID-19
By that time, JD had started its farmer assistance initiative based on extensive collaboration with many production zones across the country. JD immediately opened green channel for flower merchants to create accounts and shelve products on JD’s platforms for sales. JD Live, the company’s livestream platform, organized an array of livestream sessions to promote flowers online.
The livestream sessions were presented in a variety of formats, such as field visits to the flower beds with the farmers, promotions with celebrity hosts, flower arrangement programs, flower knowledge popularization, tasting of cakes with fresh flowers as its stuffing which is a local specialty of Yunnan, and more.
A JD LIVE poster for flower promotions during COVID-19
“At the beginning, JD’s team members had to take us by the hands and teach us how to do online operations. But now we have learned how to run them on our own,” said Jiatian Tan, general manager of Yunnan Dou Se Flowers Technology Co, Ltd. “As we continue to enrich our product offering and improve aftersales services on the platform, we achieve much higher conversion rates online and have even made friends with our customers,” Tan added.
During the COVID-19 outbreak, more than 20 large flower plantation bases and over 100 flower farmers created online sales channels on JD.com with the company’s support. By October 2020, over 3,000 types of flower products were available on JD’s online platforms. JD has carried out more than 100 flower-themed marketing activities and over 3,000 livestream events to help Yunnan sell more than 32 million fresh flowers.
Deliver the freshness
Transportation has been a long-standing bottleneck for the flower industry. Traditionally, all flowers in Yunnan would be first transferred to Kunming, the capital of the province and then distributed to dealers for wholesale and retail across the country. As such, flowers need to change hands several times in the trading process which inevitably causes damages as well as impacts prices.
JD Logistics (JDL) is well-known for its strong fulfillment capabilities in China thanks to its integrated warehousing and delivery solutions. To shorten the distribution process, JDL has set up a handful of warehouses together with Yunnan’s production zones from which flowers are sent on a farm-to-market fast track via JD’s nationwide logistics network to customers’ doorsteps, skipping several intermediate steps along the traditional supply chain.
JD Logistics delivers flowers directly from the production bases
Based on its three years of flower delivery experience, JDL’s team has figured out a how to keep the flowers fresher on the journey: instead of processing the flowers at the warehouses in the production bases, JDL collects loose flowers and sends them to warehouses where they undergo trimming, water retention, packaging and more.
Cold chain is another safeguard for freshness over long distances. Flowers are kept in a 2-8°C environment during the whole delivery process in JDL’s cold-chain network and stored using a special preservation method.
Jointed efforts of JD Logistics, Jingxi, JD Cloud&AI on direct flower delivery from Yunnan
“The water we use to reserve the flowers is cooled down and contains the best quality fresh-keeping agents. Cold temperatures slow down the flowers’ breath and put them sleep during the transportation process,” explained Pengbo Wang, CEO of Yunnan Floriculturist Technology Co., a partner of JD Flowers. “After receiving the flowers, customers simply trim and put them in water at room temperature around 20°C. The flowers will bloom shortly after. Roses can last up to 14 days and hydrangeas can be kept over one month.”
Moreover, AllianzJD, the joint adventure between JD.com and the German insurance giant Allianz provide a third safeguard for online follower shopping. Customers can be compensated for any issues related to flower quality through online insurance claim in a timely manner. This insurance is the first of its kind in China.
Cultivate the customers
China’s flower e-commerce market has witnessed steady growth in the past five years and it is estimated by consultancy firm iResearch that the market will surpass RMB 7 billion yuan by 2020. Consumption from the first- and second-tier cities now accounts for about 60% and demand from the lower-tier markets keeps growing. This sector is expected to continue to expand in the years to come.
Chinese consumers have two main purposes when purchasing flowers. One is as gifts for holidays and celebrations, and the other is as everyday decorations. For a long time, the former reason remained dominant. Yet, in recent years, due to people’s consumption upgrade together with e-commerce platforms’ active market promotion, more and more people, especially white collar workers and other consumers in higher tier cities, are willing to buyflowers to adorn their everyday life.
JD Flower’s farm-to-market direct sales attraced international media attention
Therefore, in this August, JD rolled out a monthly flower subscription service exclusively for its over 20 million JD PLUS premium members. Starting at RMB 9.9 yuan per bouquet, every month, PLUS members will be offered a number of flower bouquets at favorable prices. In less than three months since the service was launched, it generated over 500,000 flower orders on JD’s platform, driving tens of thousands flower sales from Yunnan.
“JD PLUS members feature a strong pursuit of quality life and high loyalty and engagement on JD’s platform. They have been active in repurchasing flowers with us,” said Qihang Gao who is in charge of JD PLUS’ membership benefits. “We hope to offer this half-a-cup-of -coffee price to foster flower buying habits ( the price of a bouquet of flowers in China is often much higher than a cup of coffee) among our core user base who have shown stronger spending power than other customers.”
Monthly flower subscrption service for JD PLUS members
For customers from the third to sixth-tier cities in China whose per capita flower consumption is still relatively low, JD has leveraged its flash sales activities, social media promotions and other ways to tap their flower consumption potential too.
On the supply side, by leveraging big data and advanced technologies, JD helps to guide flower farmers on their production plans and make exclusive sales deals to help them reduce production cost and improve business efficiency.
Nowadays, many florists can benefit from JD’s consumption big data to adjust their operation plans according to more precise market feedback. For example, as Pengbo Wang introduced, flowers are often offered in four length choices: 50cm, 60cm, 70cm and 80cm. The longer the flower branches, the higher the planting cost. When he found through JD’s big data that 50cm and 60cm are the most favorable lengths, he could directly make a decision to produce flowers in these two lengths, saving much time on market research and resource allocation.
Also worth mentioning is that many flower greenhouses in Yunnan have installed sensors made by JD Cloud & AI that can integrate all relevant plantation data such as temperature, humidity and more to support farmers to digitalize the whole flower planting process.
The win-win between JD and Yunnan is clear: Yunnan’s flower production zones provide perfect opportunities for JD’s businesses to extend their market boundaries, and JD’s all-round support, which is redefining the production cost, business efficiency and customer service experience of the industry is bound to bring the flower kingdom greater prosperity in the foreseeable future.