Traditional agriculture gets internet wings: online and offline working together

Traditional agriculture rides the “internet” express

The "Guiding Opinions" propose that by 2018, the integrated development of the internet with all areas of the economy and society will be further deepened, new business forms based on the internet will become a new driving force for economic growth, and the internet's role in supporting mass entrepreneurship and mass innovation will be further strengthened.

⟦NL> Xia Lanning is a rural young man who came out of Shilong Village, Xintan Town, Suijiang. After graduating from university in 2006, he resolutely chose to return to his hometown to start a business and lead his fellow villagers to get rich together. Xia Lanning knew well that the way out for his hometown lay in adjusting the industrial structure, and its hope lay in developing and expanding economic forest fruits. So he led the villagers and actually planted half-red plums all around the Xuetang area of Shilong Village, which sits on a bare stone beach with thin and infertile soil.

By the end of 2014, the total planting area of Suijiang half-red plums had reached 60,000 mu. As Xia Lanning's half-red plum business grew bigger and bigger, he began to set his sights on fresh-food e-commerce, which stood at the forefront of the "internet + agriculture" trend. He said that combining online and offline and walking on more than one leg is more stable and also gives farmers more ways to increase their incomes.

Hu Lishan, co-founder of Weidao.com, believes that “the mobile internet has solved the problem of information asymmetry, eliminated intermediary links, and directly connected urban consumers with farmers or breeders. ‘Internet +’ can change food safety problems, and the incomes of farmers or herders will also increase, achieving higher incomes for farmers and lower burdens for city residents.”

Not only rural young people, but urban young people have also joined the tide of “internet + agriculture.” Lao Su is a young man from Shandong with rich experiences, a post-80s generation lover of travel, who once spent 6 months cycling all the way from Qingdao to Paris via 18 countries. After gaining a deep understanding of Xinjiang through multiple visits, he quit his job, opened a Lao Su Dried Fruit Shop on Taobao, started a business in Xinjiang specialties, and began his entrepreneurial path.

Why did Lao Su give up a high-paying job and choose to sell Xinjiang specialties online? He told reporters, “Some areas of Xinjiang are still in a relatively backward state, and selling their agricultural products is a big problem. The long-standing difficulty of buying and selling is a hurdle restricting farmers' income growth. I hope to help them sell good things and let local farmers earn a little more for their hard work. Modern agriculture is also developing rapidly on this vast land of Xinjiang. Small and micro businesses like mine hope that, with the support policies provided by the state, we can bring natural and delicious products to more people through the internet.”

The challenges behind the opportunities of internet + agriculture

Figures show that there are currently nearly 400,000 online stores selling agricultural products on Taobao, 212 Taobao villages have appeared in Zhejiang, Shandong and other places, and online retail sales of agricultural products have reached more than 100 billion yuan.

Today, internet + agriculture has huge development potential, while also facing many difficulties and challenges. “High logistics costs, high loss rates, and the lack of professional talent are all testing the implementation model of internet + agriculture, and all of these need to be improved step by step through time and exploration.” said Hua Haitao, CEO of Weidao.com.

Cold-chain logistics is a major threshold for fresh agricultural products going online. In the traditional sales model, large quantities of agricultural products are transported in concentrated form and distributed upon arrival, sharing the logistics costs. In the internet age, producers face consumers directly, and circulation links are reduced, but logistics costs increase, especially because cold-chain circulation is underdeveloped and circulation losses are large.

Compared with fresh agricultural products, the logistics costs of dried fruit products are slightly lower. But Lao Su's Taobao shop also faced its own logistics problems. He told reporters, “Now when shopping online, everyone is used to choosing sellers who offer free shipping. But the cost of sending express deliveries from Xinjiang is higher than from other regions, which invisibly increases costs. Shipping directly from the place of origin guarantees product quality, but also comes at a price. Our profit margin is now astonishingly low, and the largest part of the cost is express delivery.”

The China Agricultural Products E-commerce Development Report discloses that there are currently nearly 4,000 agricultural product e-commerce businesses in China, with problems such as “thousands of websites looking the same,” high costs, and inconsistent standards. Only 1% are profitable, while 88% are losing money.

Industry insiders say that for producers, the lack of professional talent is also an undeniable reality. Data show that in the next two years, the demand for e-commerce talent by county-level online merchants will exceed 2 million. At the same time, because agricultural production is highly seasonal, agricultural products often go on the market in concentrated periods, and many producers worry about risks and do not dare to “bet” on the internet.

As for “Internet +,” Lao Su has his own view. He said that internet + traditional industries is not a simple addition, but rather the use of information technology platforms and internet platforms to allow deep integration between the internet and traditional industries and create a new development ecosystem. This is equivalent to giving traditional industries, especially traditional agriculture, a pair of “internet” wings. In such a broader environment, we small and micro enterprises can also do our best to discover broader market space.