Ag Retailers Managing the Coming Ecommerce Wave
October 28, 2019 For ag retailers, the term “ecommerce” in agriculture has historically conjured up unpleasant images of “cutting out the middle man” and going around the traditional channel through some measure of electronic connectivity and software wizardry.
The industry’s initial foray into ecommerce came during the dot-com boom at the end of the last century, when companies like XSAg sought to match buyers and sellers of crop protection products on an internet auction-style site. It managed to disrupt the brokers and those dealing largely with post-patent products on the fringes of the system but didn’t really make a significant dent in rank-and-file retailers and co-ops.
But the tide is turning, and farmers are increasingly trusting and embracing digital transactions. One driver is the increasing use of sites like Amazon for purchasing. Another is the general move of software and digital products away from the desktop and into the cloud, which is improving the efficiency of data collection, information management, and opportunities to buy and sell. It is adding up to an industry that’s ready to engage online in a way that adds value.
For its part, retailer Nutrien’s announcement of a multi-million investment in digital products, including ecommerce, was a stone in the retail pond, causing ripples of activity at retail dealerships and cooperatives across the country.
Retailers are recognizing the ecommerce trend and are not only laying out strategies for addressing the latest e-commerce wave but also putting down some roots on new offerings that give the grower customer options.
That said, “ecommerce” as a strategy is much more nuanced for the retailer than simply a “place to buy stuff.” While there are offerings that provide a neutral space for matching buyers to sellers that fill the bill for a cash-and-carry approach, retailers on the front end are more often using these platforms to engage new customers with service and reinforce their overall value with existing customers through post-transactional engagement.
Different Battlefield
Amy Asmus of Asmus Farm Supply (AFS), Rake, IA, doesn’t see a lot of difference between choices that retailers have historically had to make about disrupting technology, from glyphosate-tolerant crops two decades ago to the current ecommerce movement. Disruption forces choices about the future of business, from full-on engagement to inaction. She leaves no doubt as to what side she falls on: “No matter what we do in life, we are either going to change or be changed — staying stagnant is not an option. And if I am going to be changed, I want to be at the table, writing the rules. The fact is ecommerce systems are filling a hole with our customers that I am not filling.”
That said, ecommerce is just another battlefield in the long-term war for customers that every retailer fights every day. “Whether the battlefield is the corn fields in my backyard or online, it’s the same fight we have been fighting for 59 years at AFS,” Asmus says.
For its part, AFS’s approach to ecommerce was to test the waters with AgVend. The AgVend model operates at two levels — the “blind” transaction, where the buyer does not know who the seller is until the transaction is complete, and the “storefront” model, which allows retailers to brand their own ecommerce platform.
Asmus signed on with AgVend’s blind transaction service to start. Once the transaction was complete, an agronomist would contact the farmer immediately. “We ask all about the product — are you using the right adjuvant, are you using the right rate, are you aware of storage requirements, do you have any questions about the product or label, is there anything else we can do for you?’” Asmus says.
She soon found that customers who appreciated the service were telling her that they wanted to do more business with AFS online, but the blind system made it impossible for them to identify AFS offers. So the retailer added a storefront site, providing a direct conduit to farmer-buyers that also allowed AFS to deliver the knowledge and service they are known for.
“The online transaction becomes just another contact point,” Asmus says. “It is not a ‘no service, no return’ arrangement — if all they want is cheap product and no service, we do not want them as a customer.”
Self-Built
To allow the company to engage in ecommerce on its own terms without having the burden of software development, harnessing AgVend made the most sense for Asmus Farm Supply. The Equity, a cooperative based in Effingham, IL, went all-in on developing the CommoditAg system on its own in 2017.
Last year was time for testing the program and building out its market reach. Retailers may partner with CommoditAg and essentially become brick-and-mortar extensions to the program. The market area coverage expands with each retailer brought on board. Farmers buy from the CommoditAg ecommerce site, and orders are fulfilled by partner-retailers, according to region.
Recently, long-time crop protection executive John Demerly joined CommoditAg from Corteva to help build out the platform from super-regional to a nationwide entity. “The Equity was a key partner of Corteva, and I got to know about CommoditAg when it launched,” Demerly says. “The model they were developing — partnering with progressive ag retailers to provide farmers with options to buy online — was intriguing to me.”
Demerly believes that ecommerce will continue to grow on the customer side. “To think it won’t grow is not realistic — at some point 100% of growers will buy something online.” There are certain segments of more fully integrated farmers that only need to purchase quality product with reliable delivery, he says, and there are many products that farmers understand and can handle themselves. Retailers in general have not been in a position to provide that online purchase option before CommoditAg, he says.
“We believe the advantage we have is in the partnership with progressive retailers,” Demerly says. “That ‘last mile’ is critical — to be able to offer pickup and delivery for ecommerce purchases within a certain radius is important to the farmer.”
For the retailer, that post-purchase interaction can be an opportunity to talk about additional services with the farmer-buyer. The idea is to make the ecommerce experience as positive as possible for the farmer. “We make the platform easy for farmers to use,” Demerly says. “If the product is picked up, the farmer gets a friendly greeting, is loaded up efficiently, and we follow up with them to ensure satisfaction.”
More Than a Marketplace
Whatever approach is taken to ecommerce, it needs to be a deliberate plan, Joel Wipperfurth, Director, E-Business at Winfield United, says. In other words, “Not having a strategy is still a strategy, and indecision is, in this case, a decision,” he says.
The inevitability of digital transactions of inputs is essentially the broker market on steroids. The same issues will arise that retailers face when farmers buy products from someone else and look to you for application services or recommendations. “All the pieces in the indecision game will come to the retailer in various marketplace reactions,” Wipperfurth says.
Getting in the mud with online retailing that’s too far apart from service is a mistake, he says. Retailers should try to do the things that a pure-play online retail commerce solution can’t do vs. trying to be more like them — this is when the retail value proposition can really shine.”
Service includes providing a truly local spin on product recommendations that can’t be fully explained on a website. The local trusted adviser can see the needs of the farm and make specific recommendations,” Wipperfurth says. For many pest problems, there are multiple-tiered options — which one is needed; what does the data say; is the premium option worth the extra cost; are all in the wheelhouse of the local agronomist and outside the capabilities of a strictly ecommerce site?
He adds: “While we believe that the buying and selling of products is going to be a mainstay in the marketplace, the transaction part of that is going to be less important than the value you can deliver by having an ecosystem of information connections and insights to help farmers make the decision of what products that they use on their farm.”
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