There are many regional producers and businesses right now wanting to sell online. Technology plays a huge part in agribusiness and there has been fantastic innovation using information and communication technology in the sector. But the fast take up of eCommerce is in part due to the COVID-19 pandemic and the resulting impact on business. But that has been a catalyst which has accelerated the existing growth of digital sales channels. Regional businesses, primary producers and support businesses can find it difficult to get their produce and products to market. But online sales operate 24 hours a day and 7 days a week all year around and the buyers come to you.
Increasingly we have seen trade into China made more difficult for primary producers. Reaching markets like Europe and greater Asia has seemed to be too hard. But the digital divide for Australia regional businesses has been getting smaller and eCommerce has been getting easier.
eCommerce Growth Continues
According to the National Australia Bank online retail in Australia exceeded $29 Billion in 2019 with sales estimated to exceed A$50 billion by 2021. In 2019 online retail sales worldwide will exceed US$3.4 Trillion. Australian eCommerce continues to grow and represented 9% of traditional bricks and mortar retail in 2019. This leaves enormous opportunity for new online businesses or for existing retailers to grow online.
According to the Department of Agriculture the value of Australian agriculture, fisheries and forestry production is just under $70 billion dollars (approximate 2020). Australian producers export approximately 70% of the total value of agriculture, fisheries, and forestry production.
The COVID Impact
Since 2020 COVID had its impact on the worldwide economy and marketplaces. Interestingly many companies that were selling online and engaged in ecommerce saw huge sales grow. It some case over 100% in the year. COVID made a change to the way consumers and businesses bought their products and services. The year of contactless commerce left a greater trust in ecommerce and buying online.
Producers, companies and retailers also had to create digital channels to satisfy the market demands. More online stores where created and market places like eBay, Amazon, Alibaba, Catch and others grew rapidly.
Agribusiness in Australia
There are over 200,000 agribusinesses in Australia that employ over 600,000 people. Agri-businesses come in all sizes and like all businesses they need to market their products to the marketplace.
Today more than ever businesses and consumers want to search and buy online. Results from recent surveys have shown that more and more search engines like Google dominate when consumers look for products. It is true also in agribusiness.
Although agribusiness has embraced the internet and World Wide Web in many ways. The sector has been slow to start selling products and produce online. Fundamentally the reason for this has been costs and available skills.
In agribusiness the core opportunity for ecommerce is when dealing with other businesses. What the ecommerce industry calls “business to business” or B2B. But many small producers can benefit by also selling their products directly to consumers or “business to consumer” B2C. Both models can be supported.
Direct to Consumer
Many businesses that produce their own products have now found that selling direct to the consumer (D2C) can help keep the business moving. When distribution channels close or wholesalers do not work, selling direct can be a simple solution.
Primary producers are generally focused on bulk sales and shipments. Supporting a D2C model means being able to pack and ship smaller or individualised orders. This means potentially additional resources and a higher volume of smaller shipments. But while the order value might be smaller the percentage profit is generally higher.
International Markets
More of our agribusinesses and primary producers are looking to international markets to expand the business. Selling online to international markets is an extension of the online business. The online sales channel is international but you need to ensure that you website in capable and ready. That means looking at international taxes, foreign currencies and international shipping.
It is important to target the international markets that are more important to your business and that might take a little research and preparation. Austrade offers assistance and Export Market Development Grants.
Most ecommerce systems will support international sales. There are some issues, and the core issue is the logistics of shipping products and produce outside of Australia. This may require specific licenses and export standards that will need to be obtained. There are specialty service providers that can assist.
eCommerce Technology
Improvements and innovation in eCommerce platforms and technologies now make it possible for any business to start and run an ecommerce website and sell online. Fully hosted and managed eCommerce platforms are available at a reasonable cost and allow the business to manage content and business processes.
There are a range of platforms and packages to suit most budgets. The cost will vary from business to business and based on the requirements, and there is no such thing as a free lunch. Create a plan, allocate a budget, get started and track results.
These costs do not include:
Cost of products.
Cost of shipping and logistics.
Business taxes or fees.
Bank and credit card fees.
Human Resources.
Cost of traditional marketing.
These traditional business costs will vary from business to business.
What's missing in regional Australia?
In cities and metro areas there are resources available to assist with the planning, implementation and training needed to be successful. In regional areas those resources are frequently not available but business operators want the access to that service locally. Implementing and running an eCommerce website with current technology does need an understanding and familiarity with the web. This is a gap between the city and country that is yet to be completely resolved.
Most online eCommerce platforms provide training and have partners that can assist with implementation.
Although the NBN rollout covers 90% of Australia there are still many regional areas that have limited web services. In late 2020 three quarters of regional uses still reported connectivity issues which was reported in ICT News September 2020. To be competitive in the digital world Australia needs consistent, fast and reliable internet services.
What is the downside?
None really!
By tackling the eCommerce opportunity, the business can sell more products directly to consumers and other small producers or distributors which may cut out the middleman. This can help increase revenue for the business and open new channels and new markets. It also creates an opportunity to connect with other providers and distributors. The benefits to the business:
Increased revenue from product sales.
Reduce costs of traditional channels.
Improve service levels.
Improve contact and loyalty.
Open 24/7.
Operating worldwide.
If you would like more information on eCommerce download a copy of the eCommerce for Agribusiness & Primary Producers Whitepaper or email John Debrincat at info@shapedlogic.com.au.
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