Would You Buy Valentine’s Day Roses at a 94% Discount?
What is the price of romance?
Even by the standards of Valentine’s Day markups, the price difference was staggering. Bouquets of 99 long-stemmed red roses were on sale at an upscale florist in Shanghai for 1,568 yuan ($250) during the recent love fest. Similar expressions of adoration were available online at a very wallet-friendly price of 88 yuan.
But what explains the 94% difference in pricing?
E-commerce platforms like Pinduoduo, which offered the 88-yuan bouquet, are able to connect flower farmers directly to consumers, removing the middlemen that add layers of costs as the flowers make their way from farms to florists. By aggregating demand from millions of online consumers, e-commerce platforms are able to generate economies of scale for merchants, who can pass the cost savings on to consumers in the form of lower prices.
The everyday low prices in turn are creating year-round demand for flowers, sparking a new consumer trend for discretionary flower purchases.
Sales of fresh flowers rose 150% in 2021 on Pinduoduo, while potted plant sales climbed 60%, according to data from the company. Women made up more than 65% of buyers of fresh flowers, many of whom are buying flowers for no particular occasion.
Take Ms. Luo, an undergraduate at Chongqing University, who purchased a bouquet of oriental lilies online in January to brighten up her dormitory room. Or Madam Yuen in Guizhou, who bought a potted orchid online after seeing her friend show off their orchids on social media platforms like Douyin, Weibo and Xiaohongshu.
Like other agricultural products, the majority of flower sales still take place through the traditional wholesale distribution system. Flower growers sell to wholesalers, who then sell to other wholesalers, then retailers in a five- to six-stage stepladder arrangement. Each stage of the supply chain results in add-on costs and higher prices.
But flower producers are increasingly exploring online avenues to broaden their distribution.
Shigou Town in Guangdong province, a large orchid-planting region in southern China with more than 5,000 mu of planting area, produces 33 million seedlings annually. It was able to increase the planting area by another 1,000 mu after embracing online sales.
Ling Weibin, born to a family of orchid growers in Shigou Town, was one of those quick to seize the opportunities created by online commerce.
Ling roped in his father to conduct lectures for consumers via livestreaming, covering topics like how to choose and care for orchids. The sessions attracted a large following and converted into higher sales. The Lings estimate that online orders are now more than a dozen times that of their offline sales.
Livestreaming also provided a direct feedback channel that offline sales did not. For instance, Ling’s father introduced shorter orchid varieties after feedback from consumers that they had limited space to display larger orchids.
Like it has done for producers of fruits and vegetables, e-commerce has helped to streamline the supply chain for flowers and deliver cost savings to consumers.
This certainly helps suitors who are out to impress. Who says romance must burn a hole in the pocket?
