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Click to Buy Farm Inputs Online
When Jeff Bezos launched his online company to sell books in 1994, the brick-and-mortar sector couldn’t have imagined the behemoth Amazon would become. From its inauspicious beginning, it has grown into the largest internet retailer in the world.
Today, purchasing products online is commonplace. Many consumers don’t think twice about pulling out their smartphones to order products and services in a matter of minutes – 24 hours a day, seven days a week.
For farmers, the idea of purchasing inputs online hasn’t met the trajectory of the Amazon phenomenon for various reasons. But as margins shrink and competition grows, more are looking to online portals.
“The possibility of saving money is what initially got me interested,” says Sean Rowden, who farms in Terry and Yoakum counties in Texas and uses Agrellus.farm. “I didn’t just save money, I saved time. Being on the tractor and getting bids from different vendors at the click of a button is definitely a time-saver, but I’m also reaching vendors I didn’t even know were out there.”
While there are no hard-and-fast numbers to indicate how prevalent online agricultural input buying is becoming, companies are gearing up for additional growth.
“We have exceeded all of our growth expectations on both sides of our marketplace,” says Alexander Reichert, CEO of AgVend, a digital marketplace where farmers can purchase crop protection and nutrition inputs, as well as services, from ag retailers in their communities.
“Online purchasing will help increase farmers’ time and convenience – two things they have little of, especially during peak times of the year,” Reichert says. “Additionally, and something we see with the ability to purchase product-service bundles on AgVend, farmers will have a wider selection of products and can be more selective when it comes to choosing services they need for their operations.”
Jeff Stow, president of FarmTrade.com, says farmers in the past have been hesitant to make purchases outside the traditional channels. What has helped is the increasing acceptance of online purchases, as well as the maturation of services like FarmTrade.
“We still work with local suppliers and retailers who buy and sell products through us,” Stow says. “Our sole focus is in providing a secure national marketplace for chemicals and adjuvants, saving our customers thousands through increased competition.”
Many farmers remember the dot-com boom of the early 2000s, when several companies targeted the ag community. Many of those services flamed out, leaving some to question if doing business online would ever be accepted in ag.
“There are some differences between today’s online portals and those that appeared in the 2000s,” says Kim Nicholson, president of NFocus Partners, a company that works with ag businesses to provide management advice. She is also a seasoned veteran of the ag chemical business, having held several marketing and management roles.
“Today, the consumer is used to buying online, and the logistics of making purchases are easier and more reliable,” she says.
What retailers are beginning to grasp is that someone buying a product online for a bare-bones price should not expect any extra services or support.
“Farmers have always been in search of a deal, long before the internet came into being,” Nicholson says. “You will always have those in search of the deal, but that will come at a cost. For online, that usually means service.”
Retailers who do offer that valuable support and service should not be afraid to charge for it, she adds.
Online has also adjusted course. “When online first hit ag, retailers were nervous and trying to compete directly,” Nicholson says.
Rather than compete, they are partnering with more local retailers. “There are still farmers who want the service of a local retailer. I don’t see that changing anytime soon,” she says.
Stow agrees. “There’s an implication that online will take tremendous market share from the traditional supply chain,” he says. “We cannot and will not replace the traditional channel. That’s not our goal. Our business model provides that we work within the current market structure to provide an additional service. The ag industry is massive, and we have room to grow without displacing.”
Many of the online portals work with suppliers and producers, facilitating business between the two. At Agrellus, farmers can request detailed quotes from multiple vendors competing for their business, set delivery deadlines and shipping locations, and use multiple secure payment options using the online platform or mobile app.
“Farmers get access to more products, insight into current prices, lower production costs, and they save time on purchases all in a single, secure online dashboard,” says James Ferraro, an executive and principal at Agrellus.
For dealers, they gain access to qualified licensed buyers, hard-to-reach customers, and new markets to increase sales. Shae Cunningham, owner of ChemCo Services in Perryton, Texas, a dealer-partner with Agrellus, says the portal has expanded his business reach.
“I am working with farmers who are reasonably close to my location, and I am reaching them with offers that would have taken me more time and effort in the past,” Cunningham says. “Primarily, my customers are looking for specific products. They already have agronomic services that can provide the other services they may need.”
AgVend was designed to work with the marketing channel, Reichert says. “We see the value ag retailers provide and the desire from farmers to continue working with these retailers in a more convenient and selective way. With AgVend, this is all possible. Farmers see offers for a particular product and can choose the one that best fits their needs. We are there to help facilitate the transaction, but in the end, farmers are buying from our partner retailers.”
The eCommerce Train
Despite the hiccup in the early 2000s, Reichert thinks buying online will explode. “The comfort level with shopping online today vs. 15-plus years ago is vastly different. The average farmers today fit the profile of e-commerce power-users shopping on Walmart.com or Amazon.com for a sizeable percentage of their household needs. We believe the e-commerce train is going to hit ag faster than we have seen in other industries because of this fact,” he says.
It’s certainly a concept Rowden has come to value. “I really did not comprehend how much time I was wasting hunting down the best deal,” he says. “Now, the best deal comes to me over my phone.”