A range of facilities are available at the auction, such as access to marketing channels and financial information, storage facilities and management of logistics. Prices of flowers are determined at these auctions because it offers a nodal point where suppliers and buyers can meet, and the prices set at the auction are also used in other parts of the world as price indicators. The auction also provides a place where growers who bring their flowers in large quantities at optimum transportation costs and can then break them down into smaller quantities for specific buyers and thereby improve efficiency.
While this has been a good arrangement for several years, certain developments have created a problem situation where the level of business at the auction may be compromised. These developments are as follows:
(b) While growers are able to achieve efficiency by getting savings in transportation costs, retailers are unable to achieve similar efficiencies because consumer tastes are changing and in order to satisfy those changing tastes, retailers need access to fresher flowers, smaller quantities, larger number of varieties and more than one delivery every week, thereby making the supply based auction unviable in a situation where demand might need to drive supply.
(c) The voice of retailers and their changing demands has become sharper, because of the mergers and acquisitions among them. Growers are also becoming more interested in using electronic means to sell their products.
In view of the above, the Alsameer Flower Auction has felt the threat to its existing business processes and experienced the need to bring about structural and operational changes to improve their market share, strengthen their connection with wholesalers and retailers, reduce the transaction costs and enable innovation. In order to achieve these aims, the