The Changing Face of Retail and e-Commerce in Agriculture
When you’re considering changes to ag retail, it’s often helpful to compare them to changes in non-ag retail, too.
Consider Walmart as an example. By leveraging economies of scale and using data and automation to reduce inefficiency in their supply chain, they reduced excess costs and maintained an appropriate inventory level.
The result is high quality and service but at a low price.
Amazon further changed the game by moving nearly all consumers into an e-commerce environment, making brick-and-mortar stores less relevant than ever before.
If you want your ag retail operation to remain successful in a shifting ag market, you must employ the same principles that these companies did – don’t be afraid of change!. Here are some steps you can take to realize the full benefits of modern retail practices and e-commerce in agriculture.
Follow farmers’ examples: Rid yourself of inefficiency
To operate effectively, farmers are improving their productivity and profitability primarily by reducing inefficiencies in how they farm. For example, targeted pesticide application is more cost-effective than indiscriminate spraying, not to mention the added ecological benefits.
Caption: Since the 1970s, the amount of farmland in the U.S. has remained roughly the same.
Farmers accomplish this by using data and technologies — precision ag, variable rate, farm management systems — to make micro-decisions at scale. This change in decision-making also has an impact on their purchasing decisions as well.
Consider the pesticide example above. If a farmer is more efficient in applying pesticide, they’re going to buy it in lower quantities, which lowers their price point.
To overcome this and many other changes, you must rid yourself of inefficiencies that add costs to your sales and service processes. The days of pen-and-paper order-taking are over! Instead, it’s time to embrace more cost-effective methods.
Provide farmers with an e-commerce option
Farming is personal, and that personal connection is probably why ag retailers often prefer the traditional approach of meeting with a farmer and walking through their fields over modern retail solutions like e-commerce. It just seems more personal.
But, because of its online nature, e-commerce can actually lead to deeper insights into the farmer and their operation than a simple conversation will reveal. For example, when you have an online record of their purchasing history, as well as their personal information, you can append detailed data on their crops, fields, planting history, financial estimates, and much more.
Having detailed data leads you to understand the farmer better and more effectively monetize the relationship.
E-commerce in agriculture also is more expansive than many realize. It doesn’t just include farmers having an online portal for scheduling and order tracking. It includes farmers actually going online, comparing products, and making the purchase there without ever stepping foot in the store. Or, they may come and visit your physical location but make the purchase at home after having more time to research.
It comes down to this: if the farmer wants to buy in a certain way, then part of your job as an ag retailer is to serve them the way they want to be served. Ultimately, to be successful as a modern ag retailer, you must work to reduce friction on the part of the customer and cost on your part. If that means giving up traveling out to the farm for a conversation, then that’s how it has to be.
Be customer-centric in reality, not just in theory
Every business wants to be customer-centric, but that shouldn’t just be a bullet point on a flyer. It should be a principle that guides your decision-making, particularly in terms of marketing, sales, and service processes.
To be truly customer-centric, you must embrace what the customer wants. That, of course, requires that you understand what the customer wants in the first place.
It may not be easy to put into action, but if your farmers are interested in purchasing through e-commerce, then part of your job is to provide that option to them. On the other hand, if they want a more traditional “sit down and have a meeting” path to purchase, you should also provide that to them.
Make your decisions based on the farmer’s needs, through the use of e-commerce in agriculture, through more targeted marketing and product recommendations, and offering a better intersection of quality, service, and price.