Purdue: The 3 Business Models Taking Ag Input Sales Online

The data show that 8% of farmers purchased some of their crop inputs online in 2018, and of the total sample 13% plan to purchase some of their crop inputs online in 2019. ( Lindsey Benne )

A new article from Purdue University details how three formats have emerged as the strongest contenders in transforming ag retail from bricks and mortar to online transactions.

“After great expectations, some attempts, overpromises and maybe some frustration, this channel format slowly started to take shape. Interestingly, it is gaining a complexity in itself such as e-commerce in other industries. In certain ways, it is now impossible to talk about just one ag input online channel format anymore.” says Dr. Luciano Thome e Castro, International Adjunct Professor at Purdue.

He and colleagues outline these three formats as:

  • the retailer-farmer online-only marketplace (no physical presence)
    • examples include: AgVend, Agrellus and CommoditAg
  • the manufacture-farmer direct online sales
    • examples include: Farmers Business Network
  • the retailer-farmer omni-channel experience (both online and physical presences)
    • examples include: Nutrien Ag Solutions

The authors detail the unique challenges of each format.

The online-only marketplaces must attract dealers to offer products for online transactions while balancing the prices, margins and commissions for the involved parties.

The direct online sales platforms are challenged to develop a product portfolio for direct-to-farmer sales while offering services for delivery and financing.

The omni-channel model’s biggest challenge is integrating the customer experience between the online and in-person sale events, while also managing any potential conflict in the sales channel.

The article also provides the five questions to better understand the services offered by the traditional market channel:

  1. Does the channel do bulk breaking to match the lot size required by farmer customers?
  2. Does the channel reduce the average time customers of that channel wait to receive goods?
  3. Does the channel make it easier for customers to purchase the product?
  4. Does this channel bring a better assortment?
  5. Does the channel provide extra services needed (delivery, training, application, returns, credit)?

Read the full article here.