"NL: "Trading can be done online, why still auction?"

The rate with which the market is changing is greater than ever. And change means both opportunities and the need to adapt. At least, that is the conviction of René Fransen, who is stirring things up with his company Ai2.

In a nutshell, Ai2 regulates payments between producer and buyer more efficiently than FloraHolland, with the same guarantee, directly from the growers. In addition, Fransen offers an supply-order platform, Direct Connect (a platform for growers to share real time stock information with exporters, from which the latter can order directly). He also offers clients a bit of distribution at the auction, including stock management for growers (through the company AGS). Growers and traders can use one of these services or combinations of them.

This may in principle sound simple and perhaps not even very new. More and more trade is being handled digitally and businesses that support this - by connecting supply and demand and facilitating logistics and financial settlement - certainly aren’t unique anymore. However, there’s something that sets this apart because it puts existing structures into question. Certainly the cumbersome FloraHolland auction.

"We get increasingly more growers and buyers who don’t have or want an auction number anymore. I don’t know if this is more than before and whether the number is growing. What I do know is that the number approaching us is growing. And they come to us, because they’re seeing the world change and are asking themselves if there’s a different way of doing things - given all the changes, the auction’s struggle with its own future and identity, and the offer (including ourselves). All of this says that there are alternatives that are as good or better and at lower cost. Those growers are looking for similar, alternative payment options: just as safe and guaranteed, but without the high membership fees and sales limits. In addition - and that too is not unimportant - they’re looking for a party that, unlike FloraHolland, doesn’t do anything with the transaction information."

These are changes that can’t be stopped, Rene knows. "When all aspects of trading can be handled online, what do you need such a large organization for? The added value of FloraHolland is not a clock but quick logistical handling after the purchase process. That's why a trader buys there. Without it, there’s no added value. FloraHolland's decision to operate on its customers’ sales market on the grounds of the changing market is incomprehensible, since the current revenue stream depends on the current export customers."

And there are other reasons for growers to look around. "If a trader approaches a grower saying ‘I want to buy your flowers, but only outside the auction’, then the grower will think twice about it, even if there are nostalgic feelings towards the auction and the grower claims to need it." Also, other parties are emerging, like FloraXchange, that - besides being competitors - also show that things can be handled differently. "I'm happy about this, with multiple platforms specialized in different segments and services the sector can develop quicker and growers and buyers can choose which provider best suits their business."

The trend towards online began a while back. Ai2’s 10-year existence this year is proof of this. And now things really seem to be speeding up. According to Fransen, the notion that ‘if we’re going to do things differently, we really need to approach things differently and also let go of familiar structures’ is really beginning to take hold. "In my opinion only the auction itself is completely missing the mark. So others are currently increasingly going around it, in increasing numbers."