Opinion: Service Remains Key in Ag Retail

Opinion: Service Remains Key in Ag Retail

With the Christmas holidays over and 2019 in full swing, most of us will have had some time to reflect on 2018 and on what we think 2019 might have in store for us personally and for agriculture in general, writes Reinder Prins on PrecisionAg.com. During this break I managed to catch up with a number of friends that work in agriculture, both in Australia and overseas, and asked them what their thoughts were. Aside from talking about the obvious topics such as commodity prices, weather, and certain macro-economic factors, we often ended up talking about price vs. service focus that is becoming visible in agriculture around the world.

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In 2018 we saw lots of news about how the agricultural inputs supply chain might be changing and how ‘Amazonification’ is going to cause major disruptions. As I used to work for an ag retail organization in Australia and still work with many ag retail organizations from around the world in my current job, I find it interesting to continually look at the potential merits of Amazonification being a major disruptor in agriculture.

Disrupting Ag Retail

One of the main factors to keep in mind when looking at potential disruptions in ag retail is how disruptions usually work: they tend to completely overhaul an industry, or even make incumbent actors obsolete, all in a very short period of time. Good examples of this are:

  • Uber and other ridesharing apps rapidly changing the taxi industry;
  • Netflix and others making stores like Blockbuster obsolete, seemingly overnight.

What was the real cause of the disruption here? Was it by the disruptors offering new services, or the incumbent organizations not moving with their time?

Taxi organizations in most cities did not offer any app-based booking services and you’d often be left waiting for hours for a taxi only to get into a dirty car with a grumpy driver. Blockbuster did not offer movies online, but only offered movies on DVD’s and other physical media, which created the inconvenience of having to go to a shop without knowing whether your preferred movie was available. And if you returned a movie an hour late, you’d be charged late fees. These organizations did not move with general technological advancements seen in society and are now struggling to compete or have disappeared completely.

Keeping this general pattern of disruption of industries in mind, existing ag retail would therefore need to be completely devoid of moving trends such as technological advancement in order to create the space for a disruptor to move in. Is this what we are seeing? I personally don’t think so.

Read more on PrecisionAg.com.

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Terry Sellers says:

I agree totally with your opinion of traditional Ag Retail not being totally disrupted or displaced. But, I do believe that our model will be changed. There will be an impact from the current trend to decouple price and services. Ag Retail will be forced to change the way we charge for our services, that will be more transparent and value driven. The old model of wrap around pricing is being challenged. In some or many cases their will be disruptions to the levels of service that has been taken for granted. As the old saying goes, nothing is free, continues to live.

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