Thoughts on Huajia’s failure: From monthly sales exceeding 100 million to now closing down for self-rescue, why?

Huajia was once very successful and well-known in the flower market. But now it is gradually forgotten by people. This article analyzes the reasons for Huajia's failure in detail from various aspects. Let's take a look.

On September 25, the well-known flower vertical platform "Huajia" issued an internal letter to all employees, announcing that the company had entered a phase of suspension and rectification. It is suspected that the capital chain was broken and it was facing bankruptcy.

Flowerplus, founded in 2015, was once a star company in the flower e-commerce field.

One year after its founding, the number of users exceeded 5 million, with monthly sales reaching 100 million yuan , achieving a break-even point. Two years after its founding, Huajia won angel round financing from Guanghe Venture Capital, and from 2015 to 2019, it has won six rounds of financing.

Even so, I didn't expect this to be the outcome.

I felt very sorry when I saw the news, after all, I was a user of it before. But at the same time, I was even more surprised. Because from 2017 to 2022, the daily consumption of the flower market increased from 12.7% to 28.4%.

With such good market growth, such high popularity, and a user base of tens of millions, how could it end up like this?

What changes have actually taken place here, and what inspiration and thinking does its rise and fall bring to enterprises? Next, I will review and analyze it with you slowly.

1. Reasons

In order to clarify this issue, I specifically talked to a loyal user of Xianhua, who happened to be a former user of Huajia. (This means that Huajia was once very well-known.)

I asked her if she knew about the e-commerce platform Huajia?

She said, of course I know, I was a user of it 7 or 8 years ago (around 2016), it was very popular at that time, and it was very famous. At that time, there were also people like Huadianshi.

At that time, they all offered a monthly subscription of 99 yuan, which included four deliveries of fresh flowers. The method was novel and convenient, and the quality of the flowers was also good, so I often bought flowers on the platform.

I asked her, did you continue to spend money and buy more later? How long did you not use it?

She said that it has not been used for 6 years and she will never use it now.

I continued to ask, why is this?

She said that she liked to use Huajia at that time, mainly because it was convenient and affordable (99 yuan/month/4 times), each bouquet was well matched (designed by a florist), the quality of the flowers was very good , and generally the flowers lasted for a long time after they were received, so the overall cost-effectiveness and experience were very high.

And the advantage of choosing flowers is that the selected flowers are already matched by florists, saving you the trouble of matching them. But when you buy flowers in offline stores, you need to match them yourself, which requires some professionalism, and the matching may not necessarily look good, which is inconvenient.

Source: Huajia official website

But suddenly I found that the flowers I received were not of good quality. They didn't feel fresh and had wilted petals. I was a little angry and disappointed at the time. After that, I renewed the order twice and found that the quality and experience were still unstable. The flowers were still not fresh and even had wilted petals.

The flowers I received in this way have a much shorter flowering period than the first ones. For example, the daisies I received before could be placed on the bedside for 7 days before they wilted, but now they can only wilted after 3 days. As an old user, this decline is obvious and I have a bad impression of it. This is a reason not to use it.

There are also some changes in the market environment. In the past few years, I have changed cities to work, and I found that there are many more channels for buying flowers, and they are constantly changing and becoming more and more convenient. For example, I have bought from the following channels, which are more convenient than Huajia. I don’t have to wait and can buy them at will.

(1) The automatic flower vending machines in subways have also appeared in recent years. The flowers are quite fresh and sold by the stem, with unit prices ranging from 9.9 yuan to 12.8 yuan, which is very convenient. The key is that the scene is very good. You can buy flowers on the way to work and bring them to your workstation, and buy flowers after get off work and take them home directly.

(2) Small vendors at subway entrances near residential areas often push their tricycles to sell their wares after get off work. They sell a wide variety of goods, including single bunches and potted plants. The prices are not expensive and it is convenient. If you like something, you can buy it.

(3) Like Hema Fresh, Yonghui Supermarket, etc. Now that I have a family, I need to buy groceries and daily necessities. I go to the supermarket basically once a week. They also sell flowers, at 19.9 yuan/bunch, 29.9 yuan/bunch, etc.

(4) Like Dingdong Maicai, Douyin, etc. Dingdong Maicai is the app I use the most. It also has many kinds of flowers. After buying vegetables, I can buy flowers at the same time. They can be delivered to my home in half an hour. It is very convenient. I don’t even need to go to the supermarket.

Dingdong Shopping

As a result, I basically don’t go to a flower shop unless I need to buy a large bouquet of flowers urgently or in large quantities.

And I also found that some fruit shops also sell flowers. I guess it’s not for making money, but to increase user stickiness. There are also some offline boutique women’s clothing stores, where customers will also hold a bouquet of flowers when they dress up, which adds more experience and temperament. Finally, if they like the look, they will also sell flowers.

Therefore, there are more and more convenient purchasing channels, and their quality is not bad, and there are many varieties. As a result, Huajia's advantages are becoming less and less. I rarely buy flowers on it.

After listening to her talk, I basically understood why a heavy flower user would give up on buying flowers: the key reason is the decline in flower quality and experience; then the competition intensified, and the advantages of flower matching and cost-effectiveness were gradually lost.

2. Wrong response methods

The ending of Huajia today is a bit sad. The flower market is still growing, the user demand is still there, and Huajia was successful at the beginning, winning users, winning capital, and making profits. How could it turn a good hand into a bad one?

It is obviously unreasonable to blame everything on too fierce competition, because competition always exists in every industry and every era.

Often the most fundamental reason is that when faced with change and competition, companies take a series of wrong actions, and these actions often ignore the real needs and experiences of users.

Once a company starts to ignore its users, its doom is set in motion.

This reminds me of the spiral of destruction phenomenon , where companies fail to take correct and effective measures on some key issues, thus allowing themselves to slide step by step into failure.

After learning more about the development of the flower e-commerce industry and Huajia, I sorted out the following spiral destruction model. Perhaps it more accurately reflects the mistakes Huajia made in this process.

In the field of flower e-commerce, I believe that competition is increasing in supply chain, logistics, cost, channels, marketing, etc., which is forcing Huajia to compete, but which industry is not like this?

I think the most important thing is whether Huajia has made the same mistake as many new consumer product companies, not truly "focusing on users and managing users well". When faced with difficulties, it sacrificed user value and experience, and finally loyal users kept abandoning it.

Users are the only truly important asset of a company. Only by keeping users, our expensive equipment, factories, capable employees, and products created by supervisors will have value. Only when the products are paid for by users, the company's costs will be converted into profits, and the company will have a basis for survival.

To escape the fate of a spiral of destruction, it is actually very simple. Just return to the "user-centric" thing. I can serve fewer users, but I must always strive for user satisfaction and retain loyal users.

In the spiral destruction model, if Huajia can adjust its strategy, control scale and cost, and maintain quality and experience when facing competition and challenges, it can maintain the loyalty of old users, its reputation will not deteriorate, and the loss of users may be curbed.

The earlier in the spiral, the lower the cost of curbing destruction; the later it is, the greater the difficulty and cost of curbing the downward spiral, until in the end it is impossible to reverse the situation.

It's a pity to add flowers.

But it seems that today it is not the only company that is falling into a spiral of doom.

Conclusion

Duan Yongping once said that in fact, business is also very simple. It depends on whether you are business-oriented (making money) or user-oriented.

A profit-oriented business cannot last long, while a user-oriented business can face challenges, survive cycles, and become a truly profitable business.

I believe that there will be many problems in business operations, but the answers are often hidden in the users. If you think about solutions with users at the center, you can win users.

He who wins the users wins the world, this is an eternal truth.

In today's stock competition market, the current competition is just the beginning. There will only be more competition in the future, and there will be no end. Only when enterprises can achieve "user-centric" competition can they be considered to have meaningful, valuable and rewarding competition.

Author: Yan Tao

WeChat public account: Yan Tao Sanshou (ID: yantao-219)