eCommerce Alone Won’t Cut It for Ag Retailers

Third-party eCommerce companies have failed to find a footing in ag because producers don’t want the traditional point, click, and buy experience. We at AgVend should know, because we were one of those companies.

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Until 2020, AgVend offered a premier eCommerce-only Marketplace for growers (demand) and retailers (supply). Our experience provided us with a deep understanding of producers’ digital purchasing preferences, which helped us realize that we, and our industry in general, have focused on online commerce in the wrong way.

Digital Engagement Infographic

Source: McKinsey

McKinsey recently updated a 2018 study of 800 growers that bears out the AgVend experience. It shows that growers want the ability to do business online, but not necessarily make purchases. And these trends are only increasing due to changing grower demographics, consolidation at the farm gate, and a general increased use of consumer digital experiences. Consider:

  • Two-thirds of growers use the web and their mobile devices for research and planning — compared to less than half who said the same in 2018.
  • More than half prefer digital channels when evaluating products — up from roughly one third
    in 2018.
  • Interest in buying inputs online plummeted to just 12% in 2020. This compares with 29% in 2018. In addition, fewer than half the number of producers who bought goods online in 2018 say they prefer those channels now.

eCommerce is one piece of a much broader online grower experience. What is required is a digital engagement platform. This offering connects commerce with personalized information and communication tools that make it easier for growers to do business with their preferred ag retailer.

Relationships Are (Still) King!

When we started AgVend in 2017, there was a real fear among ag retailers of eCommerce platforms like FBN and FarmTrade. But four years later we find this is waning, even after a year that could have been the perfect storm for channel disruption.

While traditional online consumer purchasing behavior increased in 2020 by over 40%, the opposite was true in agriculture. As stated in the most recent McKinsey study, less than half of the growers who wanted a transactional eCommerce experience in 2018 felt the same in 2020. The pandemic brought ag retailers closer to their customers due to the service and support that was necessary in a highly abnormal year.

This same sentiment extends beyond this past season. One grower in southeast Minnesota told us, “I appreciate working with local businesses who know me and who know my operation. A huge bonus is that they offer a digital app so it makes every conversation more productive, saving us both valuable time when it counts.”

Our findings at AgVend show that ag retailers who offer a digital platform alongside local service and support will outcompete pure eCommerce-only companies 9 times out of 10.

Digital: The Great Amplifier of the Grower-Advisor Relationship

An integrated online platform opens new avenues for engaging customers. AgVend Partner Retailers find that 95% of their portal use has nothing to do with eCommerce. Instead, usage is centered around making it easier for growers to do business on their terms.

For example, West Central Ag Services, a Partner Retailer of AgVend, shared that in the first four days of offering their digital engagement platform, they had 108 grain contracts digitally signed. Previously, it required physically delivering a paper contract, then calling and reminding the grower to get it returned. The process often took more than a week. Now it takes 15 minutes.

But a digital engagement platform is not a replacement for people; rather, it is an enabler that helps maximize everyone’s time. Consider the following:

  • When growers are provided with easy access to information through a digital platform, they can take action on their own. They no longer need to tie up staff time for basic questions like looking up invoice details or credit balances.
  • A digital engagement platform makes it easy for your team to keep customers in the loop. Automated notifications mean that growers aren’t wondering if that field got sprayed or if their agronomist sent over soil and tissue sample results.
  • Professional staff, such as sales agronomists and grain merchandisers, also benefit from digital touchpoints. Instead of providing routine customer information, they can use this additional time to make more personalized contact, like sharing higher-value product recommendations or financing opportunities.

The Importance of “Optionality”

Growers — like all of us — want a personalized experience. They want to choose how they conduct business.

Some will opt to avoid a digital platform altogether, but many more will appreciate the option. In either case, the in-person relationship isn’t going away; it is just augmented with digital touchpoints that give growers the ability to do business the way they choose. These “digital touchpoints” include any customer interaction through the web and mobile apps, from paying an invoice, to researching product information, to comparing rebate programs and so on.

Simply put, when growers are provided with multiple ways to do business, they have a better experience. CFS, a Partner Retailer in southern Minnesota, told us they recently obtained a new customer solely because of their online presence. The grower told them that he became interested after seeing social posts that demonstrated an understanding of what the grower wanted from his ag retailer.

Digital Is Not Just About Selling – It’s About Good Business

For your most progressive customers, a digital engagement platform is no longer a nice-to have. It’s a must have.

Ag retailers who implement these strategies today position themselves to meet the needs of this evolving grower segment without alienating those who prefer the traditional route.

While necessary for any comprehensive solution, eCommerce should not be the primary focus of your digital customer experience. What’s most important is that your platform makes it easier to do business by providing one central place for a grower to manage their account, engage, and purchase on their terms across your business units.

Retailers who understand this need are the ones that will thrive and win the producer of  tomorrow.

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Alexander, I absolutely love this article. You are spot on with the way Growers think about buying or purchasing inputs. While getting the best value is always top of mind, there is no doubt that Ag Intelligence and Community are the critical components that make agricultural business hum! Really great article. Thanks for sharing!

Avatar for Steve Watts Steve Watts says:

Three cheers for the e-commerce executive who quickly summed up the situation and realigned the mission of his company to address what was truly needed, rather than just smugly assuming that everything in place was outdated, rife with excess, and ripe for disruption. Alexander Reichert and AgVend have chosen to work with, rather than pit themselves against, the channel. Both sides will surely benefit.

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