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    The Changing Face of Retail and e-Commerce in Agriculture

    Posted by FMiD Team on Mar 26, 2020

     

    e-Commerce in Agriculture

    When considering changes to ag retail, it's important to compare them to changes in retail outside of ag.

    Consider Walmart. By leveraging economies of scale and using data and automation to reduce inefficiency in their supply chain, they reduced excess costs and maintained an appropriate level of inventory.

    The result: high quality and service, but at a low price.

    Later Amazon changed the game once more, moving nearly all consumers into an e-Commerce environment, making brick-and-mortar stores less relevant than ever before.

    If you want your ag retail operation to remain successful in a shifting ag market, you must employ the same principles that these companies did. Embrace change, and the successes the come with successfully doing so. Here are some steps you can take to realize the full benefits of modern retail practices and e-Commerce in agriculture.

     

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    Follow Farmers' Examples: Rid Yourself of Inefficiency

    Given low commodity prices and the static amount of farmland, farmers are improving their productivity and profitability primarily by reducing inefficiencies in how they farm. For example, targeted pesticide application is more cost effective than indiscriminate spraying, not to mention the added ecological benefits.

     

    U.S. Farm Size, USDA - e-Commerce in Agriculture

    Since the 1970s the amount of farmland in the U.S. has remained roughly the same.

    Farmers accomplish this by using data and technologies -- precision ag, variable rate, farm management systems -- to make micro-decisions at scale. This change in decision-making will also impact their purchasing decisions as well.

    Consider the pesticide example above. If a farmer is more efficient in applying pesticide, they're going to buy it in lower quantities, which lowers their price point.

    To overcome this and many other changes, you must yourself rid yourself of inefficiencies that add costs to your sales and service processes. Pen-and-paper order-taking is no longer cost-effective.

    Provide Farmers with an e-Commerce Option

    Farming is personal. This is probably why ag retailers often prefer the traditional approach of meeting with a farmer and walking through their fields over modern retail solutions like e-Commerce. It just seems more personal.

    Because of its online nature, e-Commerce can lead to deeper insights into the farmer and their operation than a simple conversation will reveal. When you have an online record of their purchasing history, as well as their personal information, you can append detailed data on their crops, fields, planting history, financial estimates, and much more.

    This leads you to understand the farmer better, and more effectively monetize the relationship.

    E-commerce in agriculture also is more expansive than many realize. It doesn't just include farmers having an online portal for scheduling and order tracking. It includes farmers actually going online, comparing products, and making the purchase there without ever stepping foot in the store. Or, they may come and visit your physical location, but make the purchase at home after having more time to research.

    It comes down to this: if the farmer wants to buy in a certain way, then part of your job as an ag retailer is to serve them the way they want to be served. Ultimately, to be successful as a modern ag retailer, you must work to reduce friction on the part of the customer and cost on your part. If that means giving up traveling out to the farm for a conversation, then that's how it has to be.

    Be Customer-Centric in Reality, not Just Theory

    Every business wants to be customer-centric, but that shouldn't just be a bullet point on a flyer. It should be a principle that guides your decision-making, particularly in terms of marketing, sales, and service processes.

    In order to be truly customer-centric, you must embrace what the customer wants. That, of course, requires that you understand what the customer wants in the first place.

    It may not be easy to put into action, but if your farmers are interested in purchasing through e-Commerce, then part of your job is to provide that option to them. On the other hand, if they want a more traditional "sit down and have a meeting" path to purchase, you should provide that to them as well.

    Make your decisions based on the needs of the farmer. That's through the use of e-Commerce in agriculture, through more targeted marketing and product recommendations, and a better intersection of quality, service and price.

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