How Is Feed E-commerce Reshaping the Industry's Marketing Chain?
Today, the Internet is changing the way people produce and live. In rural areas, more and more farmers are setting foot on the Internet's “expressway,” enjoying the fruits of the new era, obtaining affordable and high-quality means of production and daily necessities through the Internet window, and at the same time pushing the agricultural products they produce onto the Internet.
In the livestock sector in particular, a large number of enterprises are laying out feed e-commerce, upending the feed marketing chain, bringing economic returns to farmers, and in turn prompting more and more young farmers to embrace feed e-commerce.
Inside the Industry
Farmers Pay for High
⟦NL> Transaction Costs
Liu Jiangang, a pig farmer in Jingxing County, raises 40 sows and used to buy pig feed from dealers. At the end of last year, he heard people from a neighboring village say that buying feed online was cheaper, so he tried buying the same brand of feed from a feed trading website. “I often buy Mingrida brand premix, 20 kg per bag; it sells for at least 130 yuan on the market, but only 84 yuan online.”
In the traditional marketing model, where did the 46-yuan price difference on this bag of feed go? Most of it turned into a “hard-earned fee” that went into the pockets of sales staff.
A person with more than twenty years of experience in the feed industry revealed that there is huge profit in the marketing of feed and veterinary drugs, so much so that it can even be called “excessive profit.” “For a ton of medium-to-large pig premix on the market, the formula cost is only a little over 2,000 yuan; adding packaging, production, logistics and other costs, it is still only a little over 3,000 yuan, but what does it sell for on the market? At least 4,500 yuan, and some even more than 6,000 yuan.” Calculated this way, for every ton of premix sold, besides the dealer making more than 1,000 yuan, the salesperson's marketing expenses also run to several hundred or even a thousand yuan. “In the end, ‘wool comes from the sheep,’ and these costs are still paid by the farmers.” He told the reporter that feed costs account for about 60% to 70% of livestock breeding costs. And because channel information is not smooth, farmers pay for high transaction costs year after year, causing pig or chicken farming to often be unprofitable or even lose money.
Disrupting the Industry
Ending the Feed “Excessive Profit” Era
Wherever there are pain points, disruption exists. These “pain points” of farmers are precisely the new frontier of “Internet Plus.”
It is understood that last year the national livestock feed transaction volume was 2 trillion yuan, and the vast majority of these transactions were carried out through traditional dealers and sales staff. As a result, many people with Internet thinking saw the business opportunities contained therein, and livestock e-commerce websites sprang up like bamboo shoots after rain: Zhu E Wang built two e-commerce platforms, Jingpin Hui and Maimai Yi; Zhongguo Yangzhi Wang built the Sanbafu Mall; Zhongguo Yangzhu Wang opened the Zhuyigou Mall, and so on.
Entrepreneurs in the provincial capital have also kept pace. At the Beijing-Tianjin-Hebei Entrepreneurship Center there is a livestock e-commerce project —— China Feed Mall Network. This mall can be considered an early-starting professional e-commerce trading platform in the livestock industry, providing online trading functions for feed raw materials, feed, additives, veterinary drugs, breeding equipment and other feed industry products, allowing farmers to connect directly with manufacturers, solving information asymmetry, reducing channel links, and improving the allocation efficiency of livestock breeding resources.
Since officially starting operations in November last year, in just a few short months, the mall has already had 15,000 registered members. This model undoubtedly ends the “excessive profit” era of the feed industry and maximizes protection of farmers' rights and interests.
Zhao Jianghai, a pig farmer in Lingshou County, is a customer of this mall. He raises 200 pigs, and one pen cycle is three to four months, requiring 40 to 50 tons of feed. For one type of feed he often buys, each bag weighs 40 kg, and the price difference between buying online and buying in a physical store is about 20 yuan.
He did the math: on average, one pig needs 9 bags of feed, and buying online can save 180 yuan. “Last year pig prices kept falling, and the purchase price was 5.5 yuan per jin. Many farmers could only make money if they sold at 6 yuan, while I could cover costs by selling at 5.5 yuan. So recently my pig farm has not suffered losses.” Today, Zhao Jianghai has become a “part-time” promoter for the website, driving many surrounding farmers to place orders online to buy feed.
Industry Growth
Developing Products Around User Needs
The Internet is an open field, and mutual imitation and mutual copying are unavoidable.
A large number of livestock industry information websites have poured into the blue ocean of livestock e-commerce, investing funds and manpower to develop online trading platforms, hoping to seize the opportunity before industry oligopoly appears, use the traffic advantages of existing industry information websites, and guide some existing farmers to their own platform malls, thereby achieving success. Standing at the “outlet” of livestock e-commerce, how can one come out on top?
Through continuous experimentation, these livestock e-commerce players have found a “knack,” namely “users are king.” Whoever can truly bring farmers real benefits, and whoever's services can effectively help farmers solve practical difficulties, is the mall farmers will patronize more.
Around the needs of farmers, China Feed Mall Network has planned and launched a series of projects, for example cooperating with banks to provide small loans to farmers; cooperating with slaughterhouses to help farmers sell meat, eggs and other livestock products. At present, the website's technical department is also independently developing an intelligent backend. If farmers download this backend to a mobile phone terminal, they can operate the feeding process anytime and anywhere, without having to stay at the pig farm or chicken farm all the time.
Although e-commerce in the livestock industry has just started, countless people have already seen its broad future development space. Many farmers believe that livestock e-commerce platforms have dismantled the excessive profits in each link of feed distribution, letting them buy high-quality and low-priced products. For this reason alone, it is enough to believe in the broad prospects of livestock e-commerce.
Some industry insiders say that currently reducing traditional distribution costs, cutting circulation links, and improving circulation efficiency is the general trend. Breeding practitioners are increasingly younger, more educated, and more Internet-oriented, which indicates that livestock e-commerce is a new market.
But at present, this new market has also encountered some obstacles, for example farmers avoiding the risks of online shopping, consumers finding it difficult to determine feed quality, and online sales lacking brand appeal. Therefore, during the industry's growth period, livestock e-commerce still has a long way to go.