Time hasn’t run out yet. And it’s absolutely not his intention to start a fight with the auction. On the contrary, Marco van Zijverden would like to collaborate with FloraHolland, like-minded traders and forward-looking growers, to sustain the future of the marketplace. “I hope that the auction will make decisions and that they’re going to make some clear choices.”
In a relaxed pose, at the meeting table in his office at Dutch Flower Group in Aalsmeer, Marco van Zijverden says: “What shall we talk about?” His smile betrays the rhetorical character of his question. In last month’s blog on Floribusiness, he expressed himself critically about Royal FloraHolland. For example with regards to how they failed to deliver on promised results and with regards to statements made by Lucas Vos.
FloraHolland’s CEO had suggested that trading companies weren’t innovative enough and he had questioned their existence. In response, Van Zijverden wrote that it was time for FloraHolland to take a look in the mirror. “As a market leader, you sometimes have to push certain themes to the foreground. I thought we did that quite nicely.”
What about FloraHolland? What was their reaction?
“FloraHolland wasn’t so happy of course, initially. But all other comments that I got were very positive. It turned out that many parties shared my opinion. The auction is not transparent. They’re investing in all sorts of projects, but growers and traders haven’t seen much in return so far. Their logistic performance lags behind and the promised €100 million cost reduction hasn’t materialised yet. It was time to do something.”
And? Did your blog make a difference?
“I had a meeting with Lucas and he clarified a number of things. About their digital platform for example. They’ve opened it up to everyone. Any trader, from a small florist in New York to the large trading companies in the Netherlands, can buy through it. I’ve got to admit that that’s fair. But whether I’m happy about it, that’s another matter.”
Are you worried about the position of the traders?
“It might be disruptive, but I’m not worried about the future of the trade. A florist in New York will never be able to organise air cargo in a cost efficient way. And it isn’t that easy for importing flower traders to add the same value that we add every day. Our services include access to a complete assortment, customised packaging, quality control, financial services, the option of buying the majority of the assortment straight from the growers, category management and much more. All of that will help the trade to maintain its position.”
So what are your concerns with regards to an open marketplace?
“It adds a new challenge to the logistics. There’s an increase of smaller orders, which comes with higher costs. The current transaction fees are too low. The charge is €0.90, but the costs are easily twice as much. One box of flowers provides the auction with the same amount of work as a whole trolley. If FloraHolland continues to subsidise the small-scale orders, we’ll have to make adjustments at some stage.”
Has time already run out?
“Not quite I think. I’m not looking for a fight with FloraHolland at all. I feel we’re engaged in a pretty healthy, constructive dialogue at the moment. Customers are informed of important decisions at an early stage and we agreed that customers have a say in things too. DFG takes its responsibility of course, but it’s not like the auction immediately acts upon anything I say. It has to be a joint effort. The future of the auction has to be defined by leading growers and traders, all together.”
What should FloraHolland do in the short term?
“The auction’s logistic performance continues to be mediocre. Our orders are consistently delivered late. And there’s currently a shortage of containers and trolleys. FloraHolland has 250,000 trolleys in circulation, which are written off over a period of ten years. So it shouldn’t be a problem to invest in new trolleys on a yearly basis. The sector simply needs them, especially with the increasing number of small-scale orders. If they can put €10 million towards China, Turkey and Let it Grow, there must be enough money for logistic means? FloraHolland promised to do something about this. Logistics is the auction’s core business. That’s what they should be focusing on; they’ve got to organise this efficiently.”
In what way?
“No more Today for Today auctioning – that causes too many delays. We’ve got to move towards a trading system of Today for Tomorrow. That way, they no longer need to run the clock from 6 a.m., it allows for a slightly later start. The big orders can go straight to the customers. And the smaller amounts can be taken to the auction for sorting. That would improve the logistic performance. It would shorten our process by 1.5 to 2 hours per day. It’s the only way to reduce the chain costs together.”
The €100 million cost reduction is probably not going to be met by 2020.
“No, and that needs to be looked at. Those savings are very important for the sector. If you become too expensive, you’ll see new trade flows emerge. We really need each other now and I hope we’ll still need each other in the future. For our wholesale activities, we purchase for our customers on a daily basis and the auction plays an important role in that process. In my opinion, they can continue to fulfill the role of collecting, as long as they organise it in an efficient way. That would be great. I really don’t mind outsourcing.”
Do you think the clock should stay?
“The clock isn’t doing as badly as anticipated, but that’s because of the good price formation during the last couple of months. Once the digital platforms are up and running, the clock will lose its share. FloraHolland is working hard on digitalisation. I hope that the auction will make decisions and that they’re going to make some clear choices.”
What did you think of them taking over FloraXchange to start Floriday?
“I was surprised, but found it interesting too. I feel ambiguous. From FloraHolland’s point of view, I totally get it. They’re removing a competitor from the market. From the market’s point of view, I’d rather see a few systems competing with each other. FloraXchange was keeping everyone alert.”
I heard that you’re developing a platform yourself?
“We’re talking to FleuraMetz about starting a digital platform. For the time being, it’ll be a system for our preferred suppliers and growers abroad, with the aim to optimise the efficiency of our supply chain. FloraHolland members can still pay through the auction. You’ve got to keep the competition up, it leads to innovation. And it means that growers will have a choice. I can’t say much more than that at the moment, we’re still working on it.”