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In the Internet era, flower e-commerce was once seen as an emerging market full of potential. However, with the intensification of market competition and the exposure of business risks, the former industry leader has to face the cruel reality.

FlowerPlus, once the leader in the flower e-commerce industry, has recently been caught up in a storm. Recently, a document obtained by the Beijing News Shell Finance reporter from the Shanghai No. 3 Intermediate People's Court showed that the Shanghai No. 3 Intermediate People's Court had ruled in June this year to accept the bankruptcy liquidation case of Shanghai Fenshang Network Technology Co., Ltd.

Shanghai Fenshang Network Technology Co., Ltd. is the parent company of Huajia. A reporter from Beijing News Shell Finance searched the industrial and commercial and legal information and found that the once prosperous flower e-commerce leader is now embroiled in lawsuits and has become a dishonest debtor.

As a second-tier vertical e-commerce, the flower e-commerce industry has faced fierce market competition since its rise. Many entrepreneurs have flocked into this field, trying to get a piece of the pie. However, the rapid expansion of the market has also brought many problems, such as supply chain management, product quality control, logistics and distribution, etc.

The company was filed for bankruptcy and liquidation, and it was difficult to recover due to the lawsuit.

In the past, flowers were more popular with consumers during special holidays because of their ornamental and gift value. In recent years, on the one hand, with the rise of the "self-pleasing economy" and flower culture, people's demand for flowers and plants has continued to rise; on the other hand, the rapid development of China's cold chain industry and the establishment of diversified retail channels have made flowers and plants more accessible and the supply side more stable. Against this backdrop, China's flower consumption market has prospered and grown.

In this context, flower e-commerce company Flowerplus was founded in 2015. It created a daily flower subscription model of "online subscription + direct delivery from the source + value-added services" and launched a 99 yuan monthly flower package (delivery once a week, 4 times a month).

Huadianshijian and Huajia, which were on the cusp of the trend, raised funds intensively between 2015 and 2018, attracting celebrities such as Gao Yuanyuan and a number of leading investment institutions. Other brands with similar models include Roseonly, The Beast, and Love Flowers, which have pioneered a new model of subscription-based flowers. There are also brands such as Flo Garden, which specializes in unmanned flower containers.

But in just a few years, the leading brands have also gone downhill. According to documents obtained by the Beijing News Shell Finance reporter from the Shanghai No. 3 Intermediate People's Court, the court ruled in June this year to accept the bankruptcy liquidation case of Shanghai Fenshang Network Technology Co., Ltd. (i.e. Huajia).

The document shows that creditors of Shanghai Fenshang Network Technology Co., Ltd. should declare their claims to the administrator from the date of issuance of the claim declaration announcement to August 24, 2024.

Another document shows that in May this year, Shanghai Lanyi Packaging Materials Co., Ltd. applied to this court for bankruptcy liquidation of Shanghai Fenshang Network Technology Co., Ltd. on the grounds that Shanghai Fenshang Network Technology Co., Ltd. went bankrupt and could not repay its due debts and obviously lacked the ability to repay. The case has now been filed.

In addition, the Beijing News Shell Finance reporter searched a large amount of industrial and commercial and legal information and found that the once prosperous flower e-commerce leader is now embroiled in lawsuits and has become a dishonest person subject to enforcement. According to incomplete statistics from Qichacha, from 2023 to date, Shanghai Fenshang Network Technology Co., Ltd. has been listed as a dishonest person subject to enforcement seven times, with a total amount involved exceeding 3 million yuan, and part of its equity has been frozen, which means that Huajia will face a series of legal and credit penalties, including but not limited to restrictions on high consumption, restrictions on exit, restrictions on financing, etc. These punitive measures will further aggravate Huajia's operating difficulties and make it difficult for it to turn around.

The founder of this seemingly "beautiful" business once said he wanted to restart the company.

Since its rise, the flower e-commerce industry has faced fierce market competition. Many entrepreneurs have flocked into this field, trying to get a piece of the pie. However, the rapid expansion of the market has also brought many problems, such as supply chain management, product quality control, logistics and distribution, etc.

It is not accidental that Huajia fell into bankruptcy crisis. Behind it is the concentrated exposure of business risks. Huajia issued a letter to all employees in September 2023, and decided to enter the stage of suspension and rectification due to funding problems. But later it stated to the public that "Huajia has not closed down and the founder has not run away."

After several months, Wang Ke, the founder of Huajia, issued a statement in January 2024, announcing the restart of shipments to old users, with the first batch totaling 100 orders. "After more than a month of hard work, we have really restarted. Although the number is small, I firmly believe that as long as we keep moving forward, everything will slowly get better."

However, according to current legal information, there are certain obstacles for Shanghai Fenshang Network Technology Co., Ltd. to restart its flower e-commerce business.

China's flower consumption is showing a trend of transformation from gift consumption to daily consumption. According to data from the National Forestry and Grassland Administration, in 2022, the scale of China's flower retail market reached 225.476 billion yuan, and the annual sales volume is expected to reach 300 billion yuan in 2025 and exceed 700 billion yuan in 2035.

At the same time, the flower consumption industry has a low degree of concentration, and there is no absolute leading brand. In recent years, compared with the previous situation where flowers could only be bought in flower shops, e-commerce has made it more convenient for many people. Flower e-commerce companies such as Huajia and Huadianshijian, fresh food e-commerce platforms such as Meituan, Miss Fresh, and Hema, and even group purchases organized by WeChat groups have made buying flowers easier.

Behind the romance, the flower supply business is not as rosy as it seems. In order to attract customers, companies compete in product selection, logistics and price.

After the price war, the boom in flower e-commerce gradually cooled down. Ai Shang Flowers, which was listed in 2016 as the "first share of flower e-commerce", suffered losses all the way after its listing until it was forced to delist in 2019. In 2019, Huaji.com, which owns nearly 10,000 physical flower franchise stores, announced the termination of its listing on the SME board. Other companies such as Huajianhuakai and Menke Life have also withdrawn from the market.

From 2019 to 2020, Taobao and JD.com launched their own flower businesses, and Meituan and Ele.me began to operate flower and green plant categories. The entry of giants once again squeezed the market, posing huge competitive pressure on second-tier vertical e-commerce companies such as Huajia. These platforms attracted a large number of consumers with lower prices and faster delivery speeds, and Huajia's advantages were no longer there.

After 2020, the battle for flower e-commerce escalated again, and fresh food e-commerce represented by Hema, Dingdong Maicai, and Miss Fresh also joined the battlefield. External factors such as the epidemic have had a greater impact on the supply chain of second-tier vertical e-commerce companies, exacerbating their operating difficulties.

Over the years, the Matthew effect has been evident in the e-commerce industry. As a capital-intensive industry, the e-commerce industry requires a large amount of capital investment in technology research and development, market promotion, warehousing and logistics, etc. However, second-tier vertical e-commerce companies such as flowers often lack sufficient financial support, which puts them at a disadvantage in market competition.

For vertical e-commerce, acquiring traffic is the first step to survival. However, as the Internet dividend gradually disappears, traffic is becoming more and more expensive. Large platforms can easily obtain a large amount of traffic with their strong brand influence and financial advantages, while they often fall into the dilemma of traffic hunger. Faced with problems such as traffic difficulties, declining user experience, and financial pressure, if second-tier vertical e-commerce wants to survive in the fierce market competition, it must be a "nine deaths and one life" entrepreneurial road.

Cheng Zijiao, financial reporter of Beijing News Shell

Editor: Yue Caizhou

Proofread by Mu Xiangtong