By maintaining the same rates for clock, intermediary services and web shop, the management of Veiling Holambra shows how important they feel the clock is. “The entire market looks at the clock. The clock sets the price”, is their opinion.
To begin with, CEO André van Kruijssen presents some figures. The clock has a 33% share in Veiling Holambra’s entire turnover. Plants account for 80% of the total turnover. 45% of their flower sales are done through the clock. As for plants, 30% is sold through the clock. Their total turnover amounted to €175 million in 2017, he reports. That means that the total amount of clock sales isn’t very large. However, Van Kruijssen explains, “The clock is very important for us as a pricing mechanism. And clock turnover isn’t going down. In fact, clock sales are increasing by 13% this year, whereas our total sales are growing by 12%.”
When Floribusiness spoke with managers of the auction during a visit to Santo Antônio de Posse last March, they underlined their vision with regards to the clock as an important price setter. That’s why Veiling Holambra maintains the same rates for clock, intermediary services and web shop. They don’t have different rates for different volumes, either.
Chairman Joost van Oene indicated that if they introduced the cost-maker, cost-bearer principle, large growers would be paying less and small growers more. “But if that leads to the small growers dropping out, it would have a negative impact on the diversity of our clock sales. On top of that, if the clock becomes more expensive, growers will switch to intermediary services and as a result, the clock will lose its importance.”
Van Oene described the clock as the most interesting commercial instrument. “It’s the only tool that says: this is today’s price. Everybody is guided by the clock.” The chairman pointed out that in the Netherlands, it’s the large buyers who make the rules. “It doesn’t work like that here. What’s more, traders pay a lot less here than in the Netherlands. They pay € 400 per year for general administrative fees and after that, all services are free. As a result, traders don’t feel they need to shop around for the cheapest option.”
Point of discussion
Both Van Kruijssen and the management board admit that the fee structure has been a point of discussion at Veiling Holambra for a while. Large growers often say they find the fees too high. One of them brought it up, when Floribusiness spoke with him during a company visit. However, he did add he felt it wasn’t worth too much fuss.
Van Kruijssen: “Our management has a clear message: we need all channels. If one channel becomes cheaper, another one must become more expensive, because at the end of the day, we need a certain amount of income. If it was up to our members, I’m not sure whether they’d stick with the current system. But the board of management isn’t in favour of differentiation. We’re investing heavily in digitalisation at the moment. I wonder if the digital platform is currently cheaper than the clock. What’s that old Dutch saying again? ‘Don’t throw away your old shoes before you’ve got a new pair’.”
Veiling Holambra is investing in a digital platform. Auction presale is part of this. Van Kruijssen thinks it’s a way to strengthen the clock. “From next year, we’re going to make products available to customers as soon as they arrive at the auction. They’ll no longer have to wait for the clock to start running. I strongly believe in that idea. Everything is 24/7 these days and the clock can fit in with that concept.” Van Kruijssen expects that growers will be happy to supply more for clock sales once they see that auction presales are good.
The CEO says that the development of a remote-buying web application for mobile phones is another way to strengthen the clock. Veiling Holambra doesn’t have a remote-buying application at the moment, and they have no plans for one, either. “We’re taking our time with online remote buying. We don’t have an application yet. It’s a new idea, which has just been introduced in the fish trade. We’re following it with great interest”, says Van Kruijssen. “It could be another way to provide extra purchasing power for clock sales. Let’s continue innovating and keep the clock process attractive.”
The order in which products are offered at Veiling Holambra is based on quality and product group. A1 has priority over A2, which in turn has priority over B quality. “We could discuss with our members how they’d feel about a further refinement of the auctioning order by giving priority to sustainable products for example”, says Van Kruijssen, sharing some of the ideas he got during his recent visit to Royal FloraHolland in the Netherlands.
So far, nothing special when it comes to auctioning order. What’s distinctive though, is that regular suppliers to Veiling Holambra are given priority in the auctioning process. For example, everyone selling on Monday, is given a place in block A on Tuesday. Everyone who didn’t sell on Monday is given a place in block B. It works the same on all other days. Van Kruijssen: “It’s a way to reward growers who supply on a daily basis.”
The auction doesn’t have a mechanism to prevent growers from oversupplying the clock when they can’t get rid of their direct trade. “Everyone supplies more to the clock when demand goes down and that has an immediate impact on the price formation. However, we don’t want to tell growers they can’t supply more than normal to the clock.”
Van Kruijssen points out that the auction knows in advance how much and what growers will be producing during a certain season. They need this information for their logistics management. And the auctioneer, agents, growers and buyers are in contact with each other throughout the year. For example, when the auction knows they need larger numbers of plants or flowers on Monday and Tuesday, they ask growers to supply extra. And buyers sometimes indicate when they’ll be there and which products they want to buy.
Van Kruijssen says that the clocks at Veiling Holambra generally aren’t oversupplied. “We don’t have too many seasonal products. What’s more, we get relatively many potted indoor plants, and they will keep for a few days when demand is low.”