Buy smarter online
By Mike McGinnis, Markets Editor
Shopping and knowledge-based buying of farm products online are growing phenomena that experts say could change the farmer-ag retailer relationship in the future.
A recent Purdue University survey of 2,000 U.S. livestock, corn, soybean, small grains, cotton, and fruit and vegetable growers focused on farmers’ attitudes toward online purchasing vs. what products are purchased.
- READ MORE: Machinery and parts sales go online
Scott Downey, director of the Purdue University Center for Food and Agricultural Business, says the results of the 2021 Large Commercial Producer Survey show that online shopping and buying is beyond the trial stage for many farms.
The study’s results, released in July, reveal that larger farms and more educated farmers tend to buy more online. In fact, 24% of survey respondents who hold graduate degrees say they regularly buy input products online.
“That’s a pretty big number, and those are farmers with over $1 million in gross farm revenue,” Downey says. “Similarly, 24% with graduate degrees have not shopped online, so it’s a regular distribution when we look at those things.”
Many farmers are unaware they have the option to buy farm products online from their suppliers. When farmers were asked if they have the option to purchase farm products online, 50% said they don’t have the option, 21% said they don’t know, and 29% said they can.
“The logistics of delivery for some items are quite different, so that may be what’s shaping the difference in online purchasing,” Downey says. Livestock producers can buy smaller items used regularly online vs. a grain farmer who needs to buy seed for the year.
Online Purchasing Benefits:
- Expectation of a lower price.
- Ability to compare offers.
- Ease in acting on existing product knowledge.
- Time savings.
Traditionally, ag products have been sold to a farmer by way of a salesperson.
“Our study may be showing that farmers like not having to deal with a salesperson. Or farmers may be talking to a salesperson and then going online to compare offers and then buy,” Downey says. “Retailers may be giving out advice for free and not getting paid for the product. So now the buying environment is different. That environment shift has already happened in the car industry.”
The news gets worse for small towns if purchasing patterns change. The future buying habits of farmers could affect not just retailers but also rural communities.
“It could change rural communities, if you don’t have those local businesses there,” Downey says.
Online Purchasing Deterrents
The Purdue University survey revealed that farmers are worried about guarantees and returns of online purchases. Other deterrents to online purchasing included product quality concerns, arranging for service, and inability to talk to someone about the purchase (i.e., no salesperson).
Beyond the hard-core statistical results, the survey gives a glimpse of online purchasing’s growth stage in agriculture. For instance, while 50% of farmers surveyed say they didn’t think they could buy online, what happens when they figure out they can?
“Potentially, you could see online purchases double. Also, what happens when the online sellers figure out how to deal effectively with the guarantees and return issues? I think we are in the middle of the spread of online purchasing, but I don’t see this as the beginning of shutting down local ag retailers,” Downey says.
Farmers and retailers should be thinking about what business looks like if farmers pay for advice separate from the products, he says.
Experts say the online shopping and not the actual purchasing of products may be what shifts retail agriculture in the future. The ongoing question is how farmers’ online purchasing experience is going to play out.
“What do farmers have to go through to get that product onto their farm, into their barn, onto their fields? So it’s first learning about the options in the marketplace. There’s a piece of this way of doing business that means learning where they can get information or buy their desired products,” says Downey. “Next, farmers need to learn how to compare different offers, conduct the actual transaction, and determine delivery logistics. Once the product is on the farm, there are service issues, and then finally return and guarantee issues, if needed.”
Online Seed Sales Grow Slowly
By Bill Spiegel, Crops Editor
Farmers can buy planter parts, farm equipment, and even land from the convenience of a smartphone. But seeds? Successful Farming® research shows that just 4% of farmers across the United States have tried online seed sales.
Joel Davidson, however, aims to grow that number.
Davidson is sales and account lead of Online Seed Sales (OLSS), a web-based platform that allows farmers to study corn and soybean seeds from several independent regional seed companies and have selected offerings shipped directly to the farm.
“Owners of independent seed companies tend to be very entrepreneurial and open to new ideas that might help them grow their business. We help them to have an online presence,” Davidson says.
The OLSS platform takes a page from Amazon’s playbook, giving users a data-rich site with plenty of agronomic and yield data about each variety or hybrid listed and the most suitable U.S. locations for the seeds.
“We give our partners total control of the products they offer, pricing, and where in the U.S. they are offered,” Davidson says.
OLSS gives regional seed companies additional reach in a competitive marketplace, while providing farmers additional choices, Davidson says. To date, 10 seed companies are OLSS “partners,” he adds, with more being added as the platform — and interest — grows.
“Seed selection is a personal decision. Users of Online Seed Sales need to find additional value, whether it is a lower price, convenience, or buying direct from seed companies,” he says. “But farmers are comfortable making purchases online.”
Through OLSS, farmers choose the products they want for a transparent discounted price, with no volume discounts, rebates, or geographic penalties. A stated price per unit of seed is exactly what farmers will pay, although shipping is not factored into the price.
The challenge with selling seeds through the internet, of course, is service and support. Davidson says sales are final, but if there is a complaint, OLSS partners have addressed them at the farmer level.
“We choose our partners very carefully. They are well known in their area and have a good reputation. The seeds they sell are top quality,” he explains.
The six-year-old company has grown steadily, with an 85% customer retention rate.
“Once farmers decide to jump over the line, they’ve been happy with the products and services they receive,” Davidson says.
Online Seed Sales has been building its business since 2018.
Farmers Business Network, meanwhile, began offering seeds on its online FBN Direct portal in 2019. The ease and convenience of buying products online is what FBN envisions for the future, explains Tom Staples, president of FBN Direct.
“Our goal is to provide service and value to our customers,” he says.
That approach doesn’t work for every farmer, however.
Chris Jeffries, president of Seed Genetics Direct, says farmers appreciate talking to seed experts and seeing crops in the field. Based in Ohio and founded two years ago, SGD sells corn and soybean seeds directly to farmers instead of using an established dealer network.
“We don’t want to be Amazon. We offer a lot of information about our hybrids, we test a lot of competitive varieties, and we have a passion for the business,” Jeffries says.
Growers want to be able to speak with seed representatives. They want to know which hybrid works on clay soils and which varieties to avoid on upland, Jeffries explains, adding that simply clicking a checkbox next to a hybrid name on a website isn’t the same experience.
“There may be some farmers who like that type of experience,” he says, “but we’re big on field days and showing farmers what works.”
Staples notes that FBN’s online experience is constantly evolving to ensure products ordered by farmers are received at the farm, on time, and ready to go as promised. In fact, “the promise” is key, Staples says.
“When farmers order from FBN, we promise the products will get to their farm by the date we promise,” he says.
With distribution centers, account managers, and support staff placed strategically across the United States, Canada, and Australia, FBN is arguably the agriculture input equivalent of Amazon.
“It is up to us to continue to develop technology and continue to be the industry leader,” Staples says.
Online Land Sales Are The New Normal
Farmland auctions are going online, and they aren’t coming back. And why not? Consumers can buy beds without lying on them and cars without test-driving them, so why not land without setting foot on it?
“Our customers are businesspeople, and they appreciate not having to attend a live sale to bid on property,” says Bill Sullivan of Sullivan Auctioneers of Hamilton, Illinois.
Early in the COVID-19 pandemic, Sullivan Auctioneers pivoted to online sales for both machinery and land.
“We’ve had several online auctions even when we could have had in-person sales,” Sullivan says.
Some buyers like the anonymity of online bidding rather than being in person and competing against neighbors. Others like the ease of participating in online platforms, rather than taking a few hours from other chores. Also, sellers see the benefits of reaching more potential buyers and better odds of obtaining a higher selling price.
“If we had a land sale with 20 to 30 people in the room, double that number of people who are potential online bidders,” Sullivan says.
Using the online method of selling, the firm scheduled more land auctions in the waning months of 2021, when potential sellers were hoping to take advantage of soaring land values, while also fending off the possibility of estate tax changes in 2022.
“We had more dates to sell in November than ever before,” Sullivan says. “That time of year, it was a big deal. That’s a tremendous advantage to the seller.”