The purpose of this paper investigates the operational efficiency of nationwide flower chain based on survey data in Korea. Three problems in the operational efficiencyappear: first, the main office does not match the amount of order with that of delivery, and there are competitors of the same chain in the same district second, the quality of flower delivered is not standardized third, the main office and the chain store in the nationwide flower chain does not achieve the incentive compatibility in making and sharing the joint profit. Hence the key point to succeed in the small flower shop is to create its own customers in the district and the nationwide chain only provides the complementary market to local flower store.

The following is the summary to promote the efficiency of distribution structure in the flower business. First, considering the fact that off-line sale is still the major part of flower businesses, we should make a greater effort to activate e-business which is the combination of off-line and on-line businesses. Second, the sale sizes, when we do not consider those who did not give an answer to the survey, appear polarized into 2 million and 8 million Won. It means that we should develop a new distribution structure through which small local flower shops can also have their own shares in the nationwide flower market. Running a nationwide chain can be one way to resolve that polarization problem, but there are still some issues that need to be addressed. For example, there already exist more than 10 companies that have nationwide chains, but the reality that the bigger chains tend to attract bigger number of people shows that network externality is an important factor for the success of the flower business. Further studies, therefore, are needed to find out an answer to this critical issue on what is the minimum number of members which can create the necessary network externalities.