E-Commerce for Ag Business: Advantages and Challenges

When deciding whether to implement e-commerce, you want to be aware of both the advantages and challenges you may be faced with to enable you to capitalize on advantages or develop plans or strategies to respond to challenges. While there are a number of aspects to assess when it comes to analyzing the e-commerce platforms available to you, covered in the article Management Considerations for Implementing E-Commerce in a Food or Farm Business, it is through the review of the following set of advantages and challenges that you should begin your journey.

Let's first take a look at what you may gain by employing e-commerce.

Advantages

Market Outlet Diversification

E-commerce can expand your portfolio of marketing outlets for your business. Different outlets typically have periods of high traffic and activity followed by periods of low or inactivity. While an online store can also experience these ebbs and flows, if you have product availability year-round, it also offers a stable presence that can become invaluable.

Product Details and Suggestions

Online you have the ability to provide detailed descriptions and photos for each of your products.  You can also easily direct consumers to other content on your website that shows how the product can be used (in recipes, displays, plantings, etc.).  Suggestions for additional or complimentary products can also be facilitated through product descriptions, photos and videos, or platform intelligence features. These advantages do come with an associated time requirement which is one of the challenges you'll face.

Expanded Customer Base

Think about your in-person customers. What percentage of those customers do you estimate to be one-time visitors?  Perhaps they stopped at your farm business while taking a long weekend drive or while visiting from out of state. If they really enjoyed their experience and your products, wouldn't you like to capture some portion of their future expenditures by having your products available to them after they return home? 

Customer Convenience

Like the previous point on expanded customer base, think of customers (both current and potential) that due to work or home schedules are unable to regularly visit your place of business. E-commerce offers them the convenience to purchase when their ability allows.

Data

The data you can collect on product sales and customers is incredibly valuable.  Through website analytics, you can track what pages and products visitors are looking at, how long they stay on particular pages, how they navigate through pages, the type(s) of devices being used, and so forth. You can then use this data to fine tune and improve the online experience of your customers.

The advantages that accompany e-commerce can be compelling. However, the true measure of e-commerce success comes with your ability to address the challenges. 

Challenges

Promotion - Attracting Customers

How will consumers know of your online store? For both new and prospective customers, you'll need to ensure an optimized web presence with a strategy for driving consumers from social media, email, and other promotions to your website and online store.

Customer Connections and Experience

Relationships are incredibly important to farm businesses and customers alike.  Developing a connection with the farms and farmers that they're purchasing from through the ability to come to your location and experience of interacting with you and the farm environment is a primary driver for many people and can be difficult to replicate in an online environment.

Time Requirement

Implementing e-commerce is a time intensive endeavor. From the time to research and assess e-commerce options for fit with your business model and products, to set-up time, to routine maintenance, there will be an additional time investment. Do you have the time and skills, or will you need to hire or recruit assistance?  Assess this just as you would for assessing the time requirements for a new in-person market outlet such as a farmers' market.

Technical Management and Support

E-commerce requires technical knowledge about the platform you're using as well as any interconnected systems (inventory management, accounting, etc.) that have been put in place.  Just as with the time component, you'll need to either have or develop these skills or hire someone that does.

Consumer Product Uncertainly

Seeing products in person provides a different experience to the consumer; and whether at an on-farm market, farmers' market, or other events, you have the ability to influence a consumer's purchase decision through personal engagement, samples, or other activities.  In an online format, these activities are unavailable leaving you to rely on photos, detailed descriptions, customer reviews, and your reputation.

Product Compatibility

Some products may not be appropriate for e-commerce sales. Not all products are a fit for e-commerce, particularly if shipping is the only option for getting the product into the hands of the customer. If you ultimately have a mix of products in your online store that can and cannot be shipped, ensure that items ineligible for shipping are conspicuously marked as such.

Packaging and Distribution

Options for getting products ordered online to the customer include self-delivery, shipping/mail delivery, and pick-up by the customer. Each of these options has its own set of advantages and disadvantages that you will need to assess.

• Self-delivery may require additional employees and resources in the form of vehicles or coolers for temperature critical items (perishables).
• If shipping through mail or courier services, individual products or complete orders that are heavy can be expensive to ship. Some items may not withstand the shipping process to arrive at the customer's doorstep intact or at the level of quality both you and your customer expect.
• Customer pick up will necessitate either implementing a scheduling process or having all orders prepared and ready to go when customers arrive.

For those items that will be shipped to the customer, packaging becomes an important factor for both product quality and the customer experience. Small businesses can face challenges in sourcing packaging materials due to preferences for large orders by suppliers or higher costs for smaller quantities. For these reasons, thorough analysis of your expenses and pricing is required.

Summary

Recently, many agricultural businesses are investigating or have already implemented e-commerce as a strategy to offset restrictions resulting from COVID-19. Whether this, or another circumstance is your driver for investigating e-commerce, ensure that you are not only familiar with the benefits you may see, but are prepared by understanding the challenges you may encounter.