This past year saw many dot-coms become dot-bombs, and agricultural e-commerce
sites aren’t immune to the economics of the Internet.

“The sands keep shifting on agricultural e-commerce” as companies struggle
to establish themselves in this new arena, says Jay Akridge, director of Purdue
University’s Center for Food and Agricultural Business and professor of agricultural
economics.

The online world of agricultural e-commerce has seen major changes in the past
months.

“A leading e-business site, Rooster.com, is merging with its sister entity,
Pradium Inc. Cybercrop.com is gone,” Akridge says. “Other changes reflect a
continued shakeout as these firms look for how to best add value for farmers
and suppliers.”

Still, some segments of agricultural e-commerce appear to be doing well, in
large part, because the industry they serve is more specialized and regulated
than other fields that business-to-business Web sites generally encounter.

“Take auctions for surplus agricultural chemicals, for example,” Akridge says.
“Because of their nature, these sales involve a whole host of regulatory and
transportation issues. Transporting agricultural chemicals is not a simple thing.
And dot-coms such as XSAg.com have put together a nice package that can serve
the farmers but also follow government regulations to deliver the product.”

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Another reason for the continued success of some agricultural Web sites is
that many of them are local. Many local farm dealers now take orders through
a Web site or via e-mail, which farmers find to be a convenience during hectic
times of the year, such as planting season.

However, even successful agricultural businesses aren’t completely immune to
the Internet downturn.

“I don¹t think any of those companies have grown as fast as they intended to,”
Akridge says. “Nobody has had an Amazon.com-type growth or anything approaching
that.”

“I don¹t think any of those companies have grown as fast as they intended to,”
Akridge says. “Nobody has had an Amazon.com-type growth or anything approaching
that.”

“It’s easy to overhype new Web sites, as we’ve seen lately, but for farm sales
it’s an area that you dismiss at your peril,” Akridge says. “There’s too much
fundamental economics underlying what makes e-commerce successful, and the Web
impacts us in so many areas, that nobody can ignore it.”

Still, there are pitfalls, and Akridge says the risks for farmers are much
greater than the chances other consumers take.

“Whether or not to buy online is a big issue for farmers. If a toy isn’t delivered
by Christmas Eve that’s bad, but if the soybeans aren’t delivered by planting,
that’s an issue on an entirely different level,” he says.

Just as consumers can shop at established stores’ Web sites as well as Internet-only
outlets, farmers now can buy from both e-businesses and Web sites developed
by more familiar names. Rooster.com and Pradium, for example, were formed by
the cooperative efforts of agribusiness heavyweights such as Archer-Daniels-Midland
Co., Cargill Corp., Cenex Harvest States Cooperative, E.I. du Pont de Nemours
and Co., and Louis Drefus Group.

“Rooster.com has very significant parents, and the fact that these companies
have contributed significant financial backing makes it a Web site that everyone
in agribusiness is watching,” Akridge says.

Some businesses offer a combination of local dealers and online services ‹
so-called “clicks-and-mortar” operations ‹ which offer the versatility of choosing
whether to buy online or in person, a model that Akridge sees as the future
of agribusiness.

“Local dealers and online services will be wrapped up so tightly that it will
be difficult to distinguish the two,” he says.

For example, a customer might work with a local supplier to purchase a product,
but then check the delivery date and technical information about the product
on the Internet.

CFor example, a customer might work with a local supplier to purchase a product,
but then check the delivery date and technical information about the product
on the Internet.

Farmers who are buying goods from Internet sites need more common sense and
skepticism than they would use in everyday business dealings, Akridge warns.
He recommends that a buyer look closely at the company’s return policy, for
example.

“Everybody who has done business on the Internet has been burned at some time,”
he says. “If you’re using a new supplier, consider doing a test purchase first.
Then you can buy a little bit more if the test went well, and see if the company
can establish a track record.”

Akridge stresses that whether buyers are looking at a businesses site or an
auction site, they should look beyond the cost.

“You may get a good price, but you have to look at what you’re giving up,”
he says. “This isn’t new; dealers have been offering deals on particular products
for years. If you have to give up too many services, such as information about
the product, that’s not a good deal. That’s common sense, but it’s easy to get
lost.”

Likewise, Akridge says auction sites can offer good deals, but only if buyers
are willing to put in the time and effort to research prices and the market
for the product they’re buying.

“It takes a pretty sophisticated buyer to know when you¹ve got a good deal,”
he says.

Related Web sites:
Akridge’s web site: http://www.agecon.purdue.edu/cab/index.htm
Rooster.com: http://www.rooster.com
XSAg: http://www.XSAg.com/