Dutch Flower Auction

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VBA is an intermediary between flower and plant growers and wholesalers. VBA provides a platform for growers and wholesalers to form a network. In essence, VBA acts as a platform provider to enable the exchange of flowers and plants between the two sides of the network. Biggest threat for VBA comes from the direct sales between growers and buyers, bypassing VBA as a platform provider. Supermarkets directly negotiate contracts with large suppliers to lock in prices and quantities in advance. There are three options that are considered: allowing foreign members, adjusting transaction fees, and developing a new label. This memo will analyze 1) VBA’s value creation and capture, 2) how VBA help create value for growers, 3) how VBA helps create value for wholesalers, and 4) cross-side and same-side network effects. Finally, I will make a set of recommendations based on the analysis.

VBA’s Value Creation and Capture

VBA provides a two-sided network to serve the growers and wholesalers. It generates profit from membership fee and commission fee. VBA’s value largely depends on the number of users make transactions on the network. Its value increases as the platform matches demand from both growers and wholesalers.

VBA enjoys first mover advantage in flower and plant auction business. VBA’s comparative advantages are its geographical and climate advantages. Netherlands has mild climate and close to sea, thus enjoys amply sun light to grow flowers. VBA has a high reputation for variety and good-quality flowers. VBA’s competitive advantages are its long history of trading flowers in Europe, world class infrastructure, highly efficient distribution system, knowledge exchange among Dutch flower growers and skilled human resources

How VBA Helps Create Value for Growers

VBA provides a place for growers to sell their flowers and plants to buyers of all kinds from all over the world. VBA helps growers create value in decreasing their opportunity...
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