The Internet Brings New Strength to Traditional Agricultural Product Distribution

As a new economic form, the Internet economy has injected transformative power into China's traditional agricultural product distribution methods. The various positive changes generated by “Internet Plus agriculture” are emerging——

Stories of e-commerce entering townships and villages to help local farmers solve the “difficulty of selling” agricultural products are unfolding continuously across various regions. Cui Jingchang, a farmer in Jiulong Village, Boli County, Heilongjiang Province, recently experienced the tremendous changes brought by the Internet. The village once had as many as 500,000 jin of unsold potatoes and could not find buyers. In previous years, they could be sold as seed potatoes, but because potato prices were relatively low last year, the demand for seed use also decreased considerably. The villagers also wanted to sell to starch factories, but nearby starch factories had shut down and no one was buying. As the potatoes were about to rot in the cellars, the villagers were extremely anxious.

At this time, an agricultural product trading platform called “Yimutian” came into Cui Jingchang's view. After receiving the request for help, “Yimutian” staff member Wang Guichen came to the village, helped the villagers download the “Yimutian” APP and posted the unsold information. A few days later, potato buyer Boss Fang from Harbin came to the village and bought all the unsold potatoes, delighting the villagers beyond expectation.

The Internet can effectively reduce distribution costs and precisely connect production and sales. It has not only spawned many fresh food e-commerce businesses in cities, but also brought innovative development in distribution methods to vast rural areas. In places such as Boli in Heilongjiang, Longnan in Gansu, and Tongren in Guizhou, agricultural product e-commerce has risen rapidly, converting a good ecological environment into economic value through e-commerce. Many Internet companies regard rural e-commerce as a “blue ocean.” Since last year, Alibaba and JD.com have respectively implemented the “Thousand Counties, Ten Thousand Villages” and “channel sinking” strategies, striving to form a two-way interactive distribution pattern in which industrial products go to the countryside and agricultural products enter the cities.

China's agricultural product e-commerce development has already entered a growth stage and is shifting toward joint driving by multiple entities, from long hovering at information services to achieving online transactions. At present, various market entities in agricultural product production, processing, and distribution are optimistic about online sales. The role of organized and branded promotion in advancing agricultural product e-commerce has become prominent. On the basis of physical store operations, e-commerce is being introduced, online and offline are being combined, and online stores and physical stores are advancing together.

Although various types of agricultural product e-commerce are developing rapidly, data show that last year online retail sales accounted for 10.6% of total retail sales of consumer goods, while agricultural product e-commerce business volume accounted for only about 3% of total agricultural product sales, more than 7 percentage points lower than the former. It can be said that the Internet's role in agricultural distribution still needs to be further tapped.

Industry insiders believe that the current insufficient standardization of agricultural products, inadequate fresh food logistics, and information asymmetry all pose obstacles to the Internet promoting agricultural product distribution. First, there is a lack of unified production standards and quality standards for agricultural products. Product standards, packaging standards, distribution standards, acceptance standards, and quality standards for agricultural products are not formulated thoroughly enough. Second, some rural areas are located in remote regions, and the reach of logistics is not extensive enough. The development of the fresh agricultural product logistics industry is obviously lacking, and preservation technology, storage capacity, and distribution strength vary unevenly, especially cold chain logistics capacity is insufficient. Third, due to information asymmetry, buyers may have some concerns. For example, some agricultural products claim to be “organic” but are actually not “organic”; some are said to be free-range eggs but are actually not “free-range.” The construction of trading rules, safety traceability, claim mechanisms, dispute resolution and arbitration, and so on, is still insufficient.

Zhang Hecheng, Director of the Market Department of the Ministry of Agriculture, believes that for the deep integration of the Internet and agricultural product distribution, it is necessary to coordinate well two types of resources: agricultural public welfare service resources and rural socialized service resources, build a three-in-one promotion mechanism of government, service providers, and operators, achieve precise information delivery to households and convenient services to villages, and explore the establishment of a sustainable development mechanism in which the government builds roads, enterprises run vehicles, and residents receive goods.

In response to the current weak links, it is necessary to accelerate the construction of a trust system for high-quality agricultural products and issue laws and regulations supporting the construction of a trust system for agricultural product e-commerce. Further accelerate the construction of the standards system, strengthen the application and management of existing agricultural product standards, and exercise control over quality standards throughout production, processing, and distribution. Encourage logistics and express delivery companies to extend their business to remote areas and cultivate an ecosystem conducive to agricultural product e-commerce transactions. Focus on solving the logistics conditions for fresh agricultural products and give policy preferences to enterprises engaged in refrigerated and cold chain agricultural product transportation. Encourage the establishment of more small regional fresh agricultural product e-commerce distribution bases.

Regional and seasonal “difficulty of selling” attracts the most social attention. Zhang Hecheng believes that an emergency sales e-commerce platform for agricultural products can be established. This platform should collect and summarize information nationwide, share national agricultural product early warning information, and at the same time gather together several types of agricultural products that need urgent sales. For example, at a certain point in time, Sichuan's citrus cannot be sold but strawberries command a good price, while Jiangsu's strawberries cannot be sold but citrus sells well, so “barter” trade can be carried out, and there will generally be room for profit.