Pance: Jeddah's Online Flower Shop

Abstract

Saudi Arabia has little online shops dealing with perishable products such as groceries, unprocessed food (agricultural products), and flowers. This has given me an idea to come up with Pance – The Online Flower Shop. Pance intends to provide easy access for people in Saudi Arabia especially those who live in Jeddah city to fresh flowers. For this, I will be developing a flower online shopping website and application to meet the growing demand for flowers in Jeddah Saudi Arabia. Presently, there is no online shop for flowers in the area which meets all the demands of the customers. So, having an online portal for fresh flowers will provide an opportunity for the customers to get flowers on a single click. Moreover, low competition, growing market demand and scalability of the business cements the fact that, if executed properly, the proposed business plan has a lot of potential. It is expected that through each sale I will earn at least 20% profit.

Background

Presently, Saudi Arabia has little online shops dealing with perishable products such as groceries, unprocessed food (agricultural products), and flowers. Therefore, developing a platform, that allows entrepreneurs to sell their perishable products (in this case flowers) and buyers access reliably, timely, and efficiently these products while taking cost into consideration, will solve cost and demands of these products by bridging consumers’ needs. Recently, there has been an increase in the demand for flowers as the population in Jeddah is increasing each year, but they do not have access to these products due to geographical constraints and physical incapability. Experience in Internet shopping has opened up new opportunities aligned with e-commerce. Therefore, introducing this business idea using my father's shop will create a massive profit from the business by targeting more clients across the city. Pance flowers intend to provide easy access for people in Saudi Arabia especially those who live in Jeddah city where the physical shop is located of perishable flowers reliably and easily without the needs of storage facilities while giving the customers the option either collect the flowers or have it delivered at their convenience.

Selling perishable products specifically flowers has proven to be a problematic e-commerce business to succeed at. Developing an online platform where people would order and purchases flowers in itself is a challenge, where making sure that flowers get to the client looking fresh and smelling aromatically as they appeared on the website can also be a great challenge according to Cheema et al. (2013). However, then, flower business in Saudi Arabia is thriving each year with at least 230 million flowers produced each year, for various occasions such as weddings, parties or house or office decoration.

The development of a flower online shopping website and application to meet the growing demand for flowers in Jeddah Saudi Arabia will be the next big thing that will happen to the residents of that city. It has been identified that floral business in Saudi Arabia and to that extension, the Middle East, has proven to be a thriving business opportunity.

Initial Evaluation

Pance ‘flowers online shop’ is a business expansion idea of an existing business, in order to increase sales and improve the client's satisfaction. The initial evaluation can be understood on the basis of the following table which demonstrates different sections of the idea and a score between 1 and 5; where 1 is (not attractive) to 5 which is (very attractive).

There are total 12 parameters on which the attractiveness of the proposed business has been evaluated. The maximum score could be 60 and minimum could be 12. A higher scoring suggests more attractive business proposal. In the present case, from the table, it can be interpreted that the market need and gap is big in Saudi Arabia. Thus it shows that the proposed business idea is quite attractive. Moreover, it is a low cost, easily financeable business with higher margins. All these parameters make the proposed business idea more attractive. However, low business cost and low initial investment make this business bit risky as there will always be a threat of new entrant. At the same time, the table shows that it is not easy to copy the same business model. Thus, it can be assumed that even though there are high chances of a new entrant, this model is attractive as it will not be an easy task for the new entrant to enter into the market easily. Finally, low competition, growing market demand and scalability of the business cements the fact that, if executed properly, the proposed business plan has a lot of potential.

Market/Industry

Flower Business in Saudi Arabia Back in the year 2000, tulips flower business was first introduced in the region not only in Saudi Arabia. Overcoming all barriers, the flower business managed to gather a firm sustainable base of regular buyers of flowers as well as delivery of fresh flowers at the doorstep by just a phone call. Offering the biggest variety of flowers in most the retail outlets across Saudi Arabia and particularly in Jeddah city and neighbouring towns and homes.

In her study, Aisha (2017) claimed that while the flower business and delivery market is transforming out of the meager retail enterprise, to an innovative form where, all florists are leaving behind the ancient form of doing flower business, and diversifying not an innovative framework of preserving the flowers through refrigeration as well as delivering to their customers in a more exotic manner of adding perfumes, greeting cards, and chocolate. Flowers are an aesthetic product used for decoration of homes, for events or ceremonies such as weddings, for gifting and many others. Particularly, according to Al-Fawaz (2014) discovers that the tulip flower is pioneering the flower market where they are extensively 7 used for decorations in homes, restaurants, offices and several other areas people live in. On a daily basis, the number of flower customers keeps on increasing in Saudi Arabia, offering several other businesses such as delivery and booking businesses to meet the increasing number of flower customers.

An article known as The Flower Expert published in (2017) identifies that the modern form of living in Saudi Arabia, consider flowers as a prime object for greetings. While the population in major towns particularly in Jeddah has heightened the demand for flowers for various occasions, it depicts that the demand for flowers will never cease to increase, and the frequent application of garlands and bouquets promote the business to be run all around a year.

The competition of the flower business has been promoted by improved import and export of products in and out of Saudi Arabia. Currently, besides large-scale farming of flowers in Saudi Arabia, the increasing demand has resulted in the country to import extra flowers from Africa. The increased supply of flowers in Saudi has led to contemporary companies to offer delivery services across major cities in the country. However, one key service provision that has not been ventures is the online shopping of the flower business. It is a platform where few companies have set and for running but failed to meet its unending demands and those of flower customers. An article; FloralDaily (2016) identifies that shopping websites are where people can purchase flowers and get delivered on the doorsteps. The website is supposed to function such as that of Alibaba or eBay, where there are express checkout privileges, booking platforms, members only special, exclusive discounts on specific periods, gift reminder services, a recall policy to assist the clients to recall the dates of crucial occasions.

Online shopping podiums are introduced and run by e-commerce companies or individual enterprises. They are developed based on the scale of customers the business intends to meet, thus may focus on delivering services only In Jeddah or across Saudi Arabia. A tailored study; CBI Market Intelligence (2016) depict that those online shopping websites that deal with perishable goods, in this case, flowers, will at first focus on a small-scale customer-based market to reduce cases of perished goods due to geographical distances. A company dealing with such perishable goods is constrained by its location and may also avoid intermediary retailers, distributors or other online network platforms. Rather they directly deal with the producers and customers with the best lot of prices and ensure that there is full control over the quality of the product. In every location, there exists a particular manner of culture unto which the online business will be dictated upon by the demands of the clients.

Market Segments

This business idea will target one main segment and three sub-segments of customers. The main target of the business is couples who are getting married. To such customers, Pance will not only provide online flowers; rather the business will provide them with different wedding packages. On the other hand, the three sub-segments include customers who need flowers to decorate their home, or who want to buy flowers for people whom they care for or for gifting purpose on various occasions.

Competition

Although online flowers shop is a new idea to be implemented in Saudi Arabia, presently there is one online shop which serves in Jeddah city. That online business can prove to be the biggest competitor for Pance. However, this shop does not own a physical store which makes it impossible for the customer to collect flowers if they want. Also, this online shop focuses more on the general gift rather than flowers in specific. So these limitations of this online shop will be the greatest strengths for Pance and do show that as such there is minimal competition in the market.

Pricing

This section shows two part of pricing, the first part is the fixed cost, and the second is the product cost.

First of all, fixed cost is a cost that does not change regardless of the increase or decrease in the profit. Therefore, in this business idea, the fixed cost will be as minimum as possible to increase the profit and reduce the risks. To do so, I will be developing a website and application. Also instead of hiring someone to operate the business, I will operate the entire business myself in the beginning. Furthermore, in the beginning, the website will run on a free server. Thus, the overall fixed cost will be approximately = £96.4 to have an online presence at both the app store and Google Play.

The main business idea behind this online shop is to expand the business boundaries of the existing physical store and to increase the customer base. Through each sale, I will earn a 20% profit. For example, in segment 2, the shop buys one flower for £0.34 and sells it for £1.10, generating a profit of more than 300%.

Further, in Segment 1, if someone ordered a wedding package through the application or website, with an average cost of £3000 for a package, then the profit from one wedding package could take care of the fixed cost for this idea.

Similarly, in segment 3, most of the profit is not just from customer buying flowers but also from the flower packing which is between £4 and £6.

Finally, the shop will provide a lot of additional services and offers to the customers. For example, if a customer buys a full wedding package, a 20% discount will be given to the customer. In addition to this, as an after-sales service, after the wedding, all the flowers will be collected and recycled to create different pokey as a gift from the shop.

Conclusion

From the overall discussion and market analysis, it can be concluded that coming up with an online shop in Jeddah, Saudi Arabia seems to be an attractive and profitable business idea. Firstly, since my father is already into this business with a physical store, so his experience will really help me at the initial phase. Further, the growing demand of flowers in the area, limited competition, low initial investment, easy availability of funding and high-profit margins ensure that if I deliver fast and reliable services to the customers, I can mint money from Pance – The Online Flower Shop.

References

CBI Market Intelligence. (2016). Tailored Study Tropical Flowers and Foliage from Colombia United Arab Emirates and other Middle East markets. CBI; Ministry of Foreign Affairs. ProVerde Trade Strategies

Cheema, U., Rizwan, M., Jalal, R., Durrani, F., & Sohail, N. (2013). The trend of online shopping in 21st century: Impact of enjoyment in TAM Model. Asian Journal of Empirical Research, 3(2), 131-141.