What are the real problems in the agricultural inputs market? An in-depth interpretation from the internet perspective
E-commerce represents a challenge of conceptual innovation for traditional agricultural input enterprises, a challenge of market transformation, and an unprecedented opportunity. In particular, the mobile internet is rapidly changing the life and production methods in China's rural areas at a speed we cannot imagine, and has even begun to lever the business format of agricultural input distribution. Major agricultural input enterprises have all taken “electrifying” actions, and 2015 was called by the industry the first year of agricultural input e-commerce.
What problems exactly do our agricultural input channels face? What problems can e-commerce solve? Only by truly and objectively studying the root causes of the problems can the architectural design of agricultural input e-commerce become an extension of traditional channels, and can the most down-to-earth agricultural input e-commerce be built.
Misreading of Land Transfer and Large-Scale Planting
Developing large-scale agricultural operations through land transfer and changing agricultural production relations has become an inevitable trend. Whether it is the reform of traditional agricultural input channels or the design of emerging agricultural input e-commerce, both take serving large-scale agricultural production as the direction for building the next marketing system. Calmly analyzing the current pattern of land transfer, the state is very clear about the separation of the three rights in land transfer, that is, on the premise that the nature of cultivated land does not change, the ownership of cultivated land remains with the village collective, the contract right remains with the individual farmer, and what can be transferred is only the management right. The essential attribute of China's land contracting has not changed. When agricultural input enterprises change traditional channels or introduce e-commerce models, they must fully consider farmers' inherent emotional attachment to the land and the actual national conditions of China's rural development, and must not only capture the needs of large growers but also maintain the traditional service supply for individual farmers.
The Sleeping Rural Logistics and Distribution System
Although there are many deficiencies in China's rural logistics development at the current stage, and logistics infrastructure, public logistics service platforms, and the degree of standardization of rural logistics services are all imperfect. But for traditional agricultural input circulation, although the agricultural input logistics system has no unified brand and system, the warehousing and distribution system for bulk commodities is relatively complete, and the number of channel stores in counties, townships and villages is of considerable scale. For the development of rural e-commerce, the existing agricultural input logistics is sufficient to support its basic distribution function, but this system is still sleeping. On the one hand, it has not formed a nationwide interactive system, and on the other hand, it is not capable of fully realizing the “last mile” service during the concentrated fertilizer application season.
There is now a term for rural logistics called “two-way logistics”. In fact, the logistics and distribution of agricultural products into cities has already become fully marketized and is highly mature. From the perspectives of operational requirements, distribution systems, participating groups, and time and transport routes, agricultural input products going to the countryside and agricultural products entering cities are two completely different channels and models, and are very difficult to integrate into one. Therefore, the distribution of agricultural input e-commerce has a fairly deep foundation in the rural market, and only needs to be upgraded and transformed through internet thinking. The so-called “two-way logistics” is probably only a theoretical concept.
Huge Room for Improvement in Financial Services
Rural finance is the core of agricultural production. Traditional agricultural input distributors are relatively rigid in their financing channels, and costs account for more than 10% of operating revenue. With the emergence of large-scale growers, the demand space in the rural financial market has become even greater. Existing rural financial credit services are mainly small-amount agricultural loans and special agricultural loans. Small-amount agricultural loans are limited by excessively low quotas, while special agricultural loans are constrained by excessively high lending conditions and requirements, making it difficult to quickly satisfy the capital needs of new types of agricultural operating entities. This precisely provides the internet platform with a market of great potential. Through internet technology, rural financial services can be launched more quickly, at lower cost and safely, thereby changing the model of agricultural input operations.
Port Setup for Information and Services Entering Villages
Information asymmetry is one of the topics for which the rural market has long been criticized. In addition, traditional agricultural input distributors mostly focus on selling products when implementing agrochemical services. Practice has already proven that it is very difficult to solve the problem of information asymmetry in the rural market through administrative means and reliance on enterprise behavior. With the state's advancement of urbanization, the rural market has begun to possess basic software and hardware for information dissemination, especially with the popularization of mobile internet technology, which has given information and services entering villages the most convenient access port. A virtual platform instead directly delivers information on agricultural product planting, sales, as well as agricultural input prices and technology, to farmers' smartphones.
Building a System of Integrity and Brand Evaluation
In traditional agricultural input operations, integrity is both the foundation for a distributor's survival and the most troublesome problem in the industry. There is dishonesty between enterprises, cheating of farmers by enterprises, and even misleading by so-called experts and unscrupulous media. That this phenomenon can exist in the rural market has both subjective and objective causes, and also lacks an effective evaluation mechanism. It is very difficult to find an effective method using the operational means of the traditional agricultural input field. However, the data-driven functions of e-commerce, the merchant evaluation function of Taobao, and the secure online payment function of internet finance will all provide a reliable supervision and evaluation system for the integrity and brand building of the agricultural input industry.
Rigid Demand in the Agricultural Input Market
The scale of rigid demand in the agricultural input market is a proposition recognized by the industry. It is just that the supply of agricultural input products is even greater, and market competition is also more complete and sufficient. But as long as demand exists, what remains is to solve the efficiency and effectiveness of supply. The many concepts of compound fertilizer products are precisely seeking greater profits within this demand. When traditional sales techniques begin to be unable to further increase market share, changing the existing agricultural input sales methods through internet thinking will be a disruption and a reconstruction of business rules.