In the run-up to Mother’s Day, Royal FloraHolland could not only report on the good turnover on our market place, but could even report a week record turnover of over 170 million euros. This is partly thanks to the clock. The average price of cut flowers went through the ceiling. The share of the clock has declined in small steps in recent years to 40% last year. But cut flowers are still for the most part traded on the clock. The clock share of cut flowers in terms of turnover is 60% and in terms of volume 54%. This shows that the prices for cut flowers are higher on the clock than in the direct streams.
An auction by means of an auction clock is a unique instrument which is even called a ‘Dutch auction’ in English. The clock proves its worth day in and day out. Last year, € 1.8 billion worth of turnover was sold via the clock. This happened via almost 6,300 KOA connections divided among almost 1,500 customers. The Clock as a good sales instrument’ is, after the good financial settlement, the main reason for growers’ satisfaction with our services.
The fact that 93% of the growers supply the clock underlines its importance. Clock buyers even place the clock at number one. Of all buyers, 84% are active on the clock. There is no better instrument for achieving optimal pricing. The success of the clock over the past hundred years is proof of that. Moreover, there is a transparent market environment where an enormous diversity of supply and demand is brought together.
It is nice to see that the basic principles of the clock have remained unchanged in a hundred years. Nevertheless, it is necessary and important to keep the clock constantly in step with the times and to adjust it where necessary. The strength and vitality of the clock are reflected in the adjustments that have been made over time, but especially in recent years. For example, KOA has not only ensured a considerable increase in the buying public, it has also ensured that the auctioning could continue last year when the capacity in the auction rooms had to be drastically reduced. That was a blessing in these very difficult times!
The dynamics of the clock require that we continuously test the auction policy against practice. As soon as necessary, we tighten the excesses policy and look at the loyalty of suppliers. A good example of process innovation is the growing clock pre-sales (KVV). KVV has a positive effect on price formation and therefore clearly adds value.
Of course, the clock does not stand alone. It is in fact a combination of deal-making, logistics and financial settlement. The clock thus fulfils the needs of users. We also do this by improving the reliability of information about product quality and developing a good and unambiguous complaints process. These are preconditions for a well-functioning clock. Another success factor is how and to what extent we can connect to the buyer’s business processes in the future. Fulfilment logistics is our answer.
We are very careful with the clock. It is too important for that. In the course of time, a lot of research has been done and a lot of plans have been made. Before you change something, you have to be sure of yourself, of course. That also characterises our approach to Nationwide Auctioning. We have, for example, gained experience in the pilot project Cut-Anthurium and at the Eelde location, and we opt for a step-by-step implementation. We will make as many changes as possible in close consultation with growers and buyers. Nationwide Auctioning is a leap forward. We are investing everything in a good and soft landing.
After Mother’s Day, we are already looking forward to the next peak moment, French Mother’s Day on Sunday 30 May. I am curious to see whether we can maintain the good flow. It will not be down to the clock.
Ruud Knorr
CCO Royal FloraHolland