Why These Five Types of Agricultural E-commerce Are Hard to Call Successful

There is no shortage of opinions in discussions about agricultural e-commerce and rural e-commerce. But on the other hand, rural and agricultural e-commerce projects that have actually succeeded on the ground and delivered results are few and far between. Perhaps it is time to set aside the influence of urban e-commerce and think about rural e-commerce independently.

Tourojie is a professional financing service trading platform in China. According to a summary by an analyst at the platform, the agricultural e-commerce projects it has encountered in recent years can be grouped into five categories.

Types of agricultural e-commerce projects

The first type is mainly about selling agricultural products. This mainly means using existing e-commerce platforms to sell agricultural products. Among these, local specialties, mountain goods, and non-staple foods sell relatively well.

The second type is mainly about selling goods to rural areas. For example, selling home appliances, agricultural materials, pesticides, and other production and daily necessities to rural areas, including similar rural strategies from JD.com and Taobao.

The third type is mainly about selling services to rural areas. For example, providing agricultural technical services via the internet, or providing big data services to farms, and so on.

The fourth type is projects engaged in rural logistics and cold-chain transportation. Logistics and transportation are essential links and elements in e-commerce development, so such projects also fall within the scope of rural e-commerce.

The fifth type is mainly about pooling rural resources. A typical example is the "Ju Tudi" project recently launched by Juhuasuan, which concentrates land resources, has consumers pay leasing fees, and lets consumers also harvest the agricultural products grown on the land.

However, it is hard to say that any of the five types of rural e-commerce projects above have achieved great success.

Agricultural e-commerce is hard to call successful

First, let us look at selling agricultural products. It is true that, relying on e-commerce channels, some individual agricultural products can achieve "sky-high" sales and have already built their own brands. Examples include those selling hickory nuts, those selling Xinjiang dates, those selling honey, and so on. But there is only a change in quantity, not a change in "quality." What can be changed is nothing more than that a certain agricultural product in a certain region is no longer unsalable, with very little impact on agriculture as a whole.

Second, let us look at selling goods to rural areas. Not only JD.com and Taobao, but also some B2B platforms, have proposed "up to the mountains and down to the villages" strategies, but rural areas cannot match cities in either consumption capacity or market size. E-commerce platforms aiming at rural areas have produced results, but not big results.

Then let us look at providing services to rural areas. The various services that internet companies provide to rural areas are still at a shallow stage, mainly information services.

Next, let us look at those engaged in rural logistics and cold chains. Those engaged in cold chains for fresh agricultural products mainly target high-end urban users, while express delivery companies are still slow to expand their networks in rural areas.

Finally, let us look at the pooling of agricultural resources. Alibaba's "Ju Tudi" project was in preparation for a long time and has just gone online. Its requirements for capital and management capability are both very high, and ordinary entrepreneurs cannot get a share of it.

The root cause of why agricultural e-commerce is hard to succeed

Why can rural e-commerce not produce astonishing results? I am afraid we still need to return to the dualistic difference between rural and urban areas. "We must admit that urban and rural areas differ dualistically in factors such as e-commerce demand, e-commerce environment, and e-commerce supporting facilities," an observer at Tourojie believes.

First, there is a dualistic difference between rural demand and urban demand in both type and scale. Looking at the sales data of e-commerce platforms, the top few categories include cosmetics, clothing, electrical appliances, and so on, but farmers and rural people do have demand for these goods, yet absolutely not as strong as that of urban people. This determines that installing urban e-commerce operating ideas in rural areas may not necessarily work.

Second, there is a dualistic difference between rural and urban e-commerce supporting facilities. Leaving aside other things, let us just look at roads. Roads determine the cost and efficiency of logistics. Even though e-commerce is flourishing in China, in many rural areas, even core villages, express delivery companies still will not provide door-to-door delivery. If logistics is like this, then there is even less need to mention high-level auxiliary systems such as cold chains.

Third, there is a dualistic difference between the rural production system and the industrial production system. Unlike production in urban factories, agricultural production is cyclical and unstable, and its production efficiency is also lower than industrial production. This determines that the cost and effort involved in agricultural e-commerce are higher than those in urban e-commerce.

Fourth, there is a dualistic difference between agricultural products and industrial products. Industrial products are differentiated products, while agricultural products are homogeneous products, making it very difficult to build a brand.

It can thus be seen that the reason agricultural e-commerce has not achieved much or produced great results is that urban e-commerce thinking has been used to operate agricultural e-commerce.

Therefore, in the view of an analyst at Tourojie, if agricultural e-commerce is to achieve great results in the future, it will need to carry out e-commerce layout and operations according to the current conditions of rural areas and agriculture.

Adjustments in thinking have actually already begun. For example, "Taoyuan Life" no longer simply sells agricultural products, but adopts C2B customization, with consumers deciding what farmers grow. What it does is not the business of a distributor, but the business of a planting decision-maker, a quality inspector, and a food transporter. Another example is Yidi Yiwei and 360 Rice, both striving to highlight the differentiation of the agricultural products they sell and build agricultural product brands, rather than merely pursuing sales volume. Also following this agricultural e-commerce line of thinking are Letv Life, Ju Tudi, and so on.

Only when we separate agricultural e-commerce and look at it independently may we be able to see a broader blue sky for agricultural e-commerce.