The $25 billion U.S. floral industry could be transformed by a startup that is turning a gaping but neglected inefficiency in the industry’s financing system into a key competitive advantage in an Internet based marketplace.

The idea behind Floraplex (www.floraplex.com) is simple: Instead of getting paid in 30 to 45 days, it’s going to offer South American growers, which supply 75% of America’s flowers, payment in seven days.
This accounting change will basically turn a consignment auction into a contract growing and selling system, linked via the web. A commercial eBay of sorts, where you can “Buy Now”, bid on Auctioned items, or pre-order. Floraplex’s proprietary transaction banks and payment processors, will finance the payment to growers and collect from the buyers.

The wholesaler’s incentive to participate is three-fold; i) pass-thru branded ordering to their retail accounts with payment/collections built in, ii) better variety and assortment of mixed boxes for everyone by order spec, and iii) quality control that could result in a premium price for their product, or at least more satisfied customers. By buying through Floraplex, with its contract growing system tracked and coordinated over the Internet, they will know when a rose was cut, thus mitigating their buying risk through the Net’s ability to link geographically dispersed trading partners.

The way it is now, wholesalers have to guess at the age of a cart full of flowers that could have been kept in cold storage at 38 degrees for as long as three weeks before they see it as it slowly moves along
a track at the big importers in Miami.

For the consumer, this could eliminate the frustration of buying a bouquet and then wondering why one bunch stayed fresh for a week and another lasted only a couple of days before wilting.

“The grower has been losing on both ends,” says Bill Mobley, CEO of Nextelligence, which owns Floraplex. “They’ve been providing the financing by default, but they also haven’t had assured sales or prices; they just put their product into consignment auctions when it gets into Miami with no guarantee of price parity and no single party to hold accountable if something goes wrong.”

Floraplex will get a small posting fee on each product listed for sale as well as transaction fee, which will be paid by wholesalers out of the money they save on the cost of getting the product to market.