When it comes to farmer purchasing options in crop protection products, the pressure from Internet-based e-commerce sites offering cheap, no frills pricing continues to mount. Farmers Business Network’s high-profile play and its villainizing of the crop protection distribution channel have served to move the needle on this trend in recent years.
When long-time retail professional Bruce Vernon was named CEO of The Equity in Effingham, IL two years ago, it was a trend that he, and the cooperative leadership didn’t feel they could afford to ignore. So last season, The Equity soft-launched an e-commerce crop protection purchasing site, CommoditAg.com.
“We started this to address a different purchasing pattern that we were seeing,” explains Vernon. “We have the full-service line that most ag retailers were built upon, and for the past ten years years we have been offering a grower-applied line for farmers who were acquiring their own spray rigs and were looking for lower priced product with less service from us. “More recently with the advancements in on line commerce we have had customers saying that they don’t require any service – these tend to be very large farming operations, often covering multiple states.”
The first year was provided relatively modest business, but Vernon notes that it’s business they would not have gotten at all without the online offering.
“We obviously like the full-service program – we have tremendous investments in assets,” says Vernon. “But there are some customers who want to buy just the product, so we trying to find a way to do that. The customers are segmenting themselves not by what they want to buy, but how they want to buy. We are just trying to participate in a portion of the business that’s just the new reality.”
The Equity has led the charge on CommoditAg, but it is just one of a network of retail entities that are a part of the system. “We had been talking to other retailers that were experiencing the same thing, and we discussed knitting together a network of us with flexible warehousing space available to manage and store product.”
Vernon says the vast majority of The Equity’s business continues to come through the traditional product and service channel, but he is also realistic about the growing e-commerce trend. “Even if we see $6.00 corn in the future, I think online purchasing will continue to grow,” says Vernon. “It’s not about being the low price, but taking out and removing expenses that these buyers do not want to pay for.”