Agricultural-input listed company goes online, business model still to be tested

While internet giants such as Alibaba and JD.com are actively setting up outlets in rural areas, agricultural and agricultural-input enterprises are actively stepping into e-commerce in response. Sierte, which mainly produces compound fertilizer products, recently announced that it plans to contribute 50 million yuan of self-raised funds to set up an e-commerce company in the Shanghai Free Trade Zone, to meet the growing online and offline consumption trend and the new needs of the vast rural areas after land transfer.

A review by the reporter found that domestic agricultural-input enterprises began small-scale experimentation with e-commerce as early as 2008. But starting this year, in the face of the surging internet wave, agrochemical enterprises have successively rolled out investment plans in the e-commerce field, injecting “internet genes,” with methods gradually expanding to a combination of online and offline, promoting in many areas such as pesticide-fertilizer integration and agricultural services.

⟦NL> A research report by Everbright Securities shows that because agricultural-input products have particularities in distribution and service, agricultural-input e-commerce cannot completely break away from offline channels, and is unlikely to be completely overturned by e-commerce like consumer goods. Therefore, the future may be a process of multi-party cooperation jointly exploring the best model, for example, internet enterprises and agricultural-input enterprises cooperating to build an industrial-chain ecosystem.

However, up to now, no model of a strong alliance between agricultural-input enterprises and internet enterprises has yet been seen. Some institutional researchers believe that the current development methods of rural e-commerce still remain to be observed. Traditional agricultural-input distribution channels must shift to providing warehousing, logistics and technical services, and the running-in and collision between old and new channels will also take time to resolve.

The above analyst believes that for agricultural-input enterprises, e-commerce will effectively improve the problems commonly existing in the industry, such as oversupply of agricultural-input products, bloated intermediate channels and information asymmetry, and is the general trend. However, “agricultural enterprises generally lack internet thinking, and becoming bigger and stronger is not an easy task.” he said.