The Key to Seed Industry E-commerce Development: Building an Ecosystem Is More Important Than Building a Platform
Over the past few years, the domestic seed industry has faced unprecedented challenges. Under the impact of low prices and thin margins, many seed companies have either been eliminated or are teetering on the brink. Facing a reshuffle, every company is striving hard, eager to emerge soon from this darkness before the dawn.
When an industry hits a downturn, there are always a few rays of light shining from afar. Among these, the one that has raised the highest expectations is none other than "Internet Plus." As a "new engine" for improving the quality and efficiency of China's economy, the "Internet Plus" action plan rapidly swept through major industries after being officially proposed at the national "Two Sessions" last year, and of course this includes the seed industry, the most upstream segment of the traditional agricultural sector.
Thus, it is no exaggeration to call 2015 the "first year" of seed industry e-commerce. Last year, before traditional seed companies had awakened, business giants had already entered the fray one after another, with platforms such as Taobao, JD.com, Aizhongwang, and Tiantianquan launching in succession. Recently, the first West Lake Seed Industry Forum was held in Hangzhou, Zhejiang, where numerous traditional seed companies and e-commerce platforms gathered together to discuss the future of seed industry e-commerce.
The Seed Industry and E-commerce Have Already "Married"
Among traditional industries, the seed industry is not large in scale, and its level of marketization has always lagged behind. In 2014, alongside agricultural inputs such as fertilizers and pesticides, seeds also began to "go online." Initially, e-commerce platforms such as Beijing's Aizhongwang and Agehui Agricultural Inputs launched one after another, and before long, e-commerce giants Alibaba and JD.com also loudly announced their entry into the rural market. After entering 2015, on the one hand, e-commerce platforms began exploring practical implementation; at the same time, some agricultural input companies also tried to advance e-commerce strategies.
However, as a living commodity, moving seed sales from offline to online has sparked heated discussion in the agricultural sector. Skeptics mostly believe that seed use is region-specific and that storage and transportation have special requirements; furthermore, purchasing seeds online lacks legality, and once an incident occurs, defending one's rights is extremely difficult. These inherent characteristics all determine that seeds are not suited to "going online."
But in the face of the "pain point" of layer upon layer of markups in traditional seed industry sales, despite widespread doubts and numerous difficulties, seed e-commerce is still highly favored and continues to advance haltingly. Many industry insiders even say bluntly: with rural e-commerce booming today, it is hard for the seed industry to remain on the sidelines any longer. If seed companies insist on going against the trend, they may accelerate their elimination.
In the view of Chen Liang, an expert at the AliResearch Institute, seed industry e-commerce is already an irreversible trend, and seed companies should actively embrace the internet; at the same time, the industry lacks large direct-sales e-commerce players with brand guarantees, which represents a huge market opportunity; as things stand now, seed industry e-commerce has already attracted the attention of e-commerce platforms and triggered changes in rules, such as extended receipt periods.
An industry insider who had conducted in-depth research on agricultural input e-commerce said bluntly in a forum speech: along with the popularization and development of the mobile internet, just like all industries, agriculture-related companies are facing pressure to transform, leading to an unprecedented "skills panic." If previously talk of agricultural input e-commerce was merely following the crowd and hard to build momentum, then starting from 2015, as large companies began deeply intervening, a trend of systemic transformation has already emerged.
At the forum, one industry insider admitted frankly: "Seed industry e-commerce has boundless prospects, and within the industry there is no dispute about this judgment. Now the two are not in a dating relationship, nor is it still a choice of whether to do it or not; rather, the two are already married, and the focus should be on how to combine. But based on the current analysis, seed companies still need to invest according to their means; betting recklessly on e-commerce is rather dangerous."
Technical Service Shortcomings Urgently Need to Be Addressed
On Taobao, if you enter "seeds," the various products that appear, such as vegetables and flowers, exceed 750,000 items. In the retail sector, balcony gardening has become the absolute mainstream. Among the top-ranked stores, "Wuwangnong Balcony Gardening" stands out. As Zhejiang's largest seed company, Wuwangnong Seed Industry launched its balcony gardening section in early this year.
"For balcony gardening, most of what we sell are small-package, novel and exotic seeds, which are also convenient for growing seedlings. Compared with the large packages sold to farmers, the profit margin is higher." Fu Li, head of the e-commerce department at Wuwangnong Seed Industry, told reporters that in addition to selling seeds, the online store also sells fertilizers, seedling trays, and gardening supplies, with average monthly total sales of around 200,000 yuan.
Although balcony gardening is favored by the industry as an emerging category, there is no doubt that the main market for the seed industry remains the wholesale market. In the past, because the vast majority of seed sales adopted a dealership and agency system, the significance of the internet lay precisely in channel reconstruction. But after all, seed industry e-commerce has only just started, and the current overall share of farmers buying seeds online is negligible.
"In the past, manufacturers could not obtain comprehensive information on end farmers, which was all concentrated in the hands of distributors and retailers, and most seed companies depended heavily on these two parties; at the same time, intermediate channels were bloated and inefficient and devoured large amounts of profit, while systematic agricultural technical services were also greatly insufficient. Opening up these information flows is precisely the key to solving the 'pain points' of the agricultural input industry," pointed out Wang Weiwen, CEO of Aizhongwang.
In recent years, due to the channel sinking of large platforms such as Alibaba, JD.com, and Kingenta, the logistics constraints hindering the downward flow of agricultural inputs are gradually being resolved. But while channels are being flattened, how to fill the gap in technical services has become the most urgent problem to solve. Industry experts say that agricultural input e-commerce involves the interconnection of information flow, capital flow, logistics, and technical services, and is far from being as simple as putting products online for sale.
Several e-commerce platform heads who spoke at the forum all said that, regarding the current shortcomings in technical services, all parties are actively making up for them by leveraging resources. For example, JD.com is promoting all-round joint marketing and plans to build 100 agricultural input service centers, 1,300 county-level service centers, and 200,000 rural promotion points; Aizhongwang, by integrating agricultural service resources from various regions, is accelerating the formation of a group of professional, reasonably priced, high-quality agricultural service partners to provide overall planting solutions.
Laying Out E-commerce Is Not Just About Building a Platform
"From the company's perspective, embracing the internet is the right direction, but taking root on the ground is obviously very important. We face not only professional large-scale growers, but also many non-professional smallholders, and the slightest carelessness can lead to disputes. Therefore, for seed industry e-commerce to take root, technical service is the core; second, channel positioning, product positioning, and customer positioning must also be adjusted accordingly; third, seeds are a special commodity, and traditional channel sales must go through the stages of variety testing, trials, demonstrations, and promotion. How can the internet connect with that?" Speaking of current confusions, a seed industry executive spoke from deep experience.
Some seed company heads admitted frankly that the rise of seed industry e-commerce will undoubtedly replace part of traditional channels, and the two themselves are in a competitive relationship. Whether they can each make up for the other's shortcomings and ultimately form a set of effective innovative models, rather than subvert each other, remains to be seen. Since agricultural input e-commerce is still developing, its final form is still hazy. But at the forum, everyone shared a consensus: building an e-commerce ecosystem is more important than simply building a platform.
It is not hard to see that when companies currently lay out internet transformation, they are not purely building platforms to do e-commerce, but rather, based on agricultural big data, by constructing various crop growth models and planting patterns, matching agricultural inputs, agricultural technology, agricultural product sales, information, finance, and other services, and expanding in multiple dimensions.
Taking Aizhongwang as an example, in addition to the basic business of agricultural input circulation, it also plans to deepen its work in agricultural services, agricultural finance, green agriculture certification, and agricultural product sales. Wang Weiwen introduced: "The Aizhongwang big data platform is gradually and accurately grasping the national situation of farmers' seed and agricultural input purchases and production. In the future, carrying out agricultural product production-marketing matching, contract farming, and even direct purchasing, as well as analyzing the market supply and demand situation of crops, will all be gradually realized."
It can be foreseen that at present, major companies and platforms are all planning to build their own ecosystems, and there will be another round of fierce competition. At the forum, many industry insiders also pointed out that when building ecosystems, how to establish a review mechanism prohibiting cross-regional operations, and how to reduce the potential planting risks of buying seeds online, are difficult problems that require local governments to strengthen supervision and join forces with e-commerce platforms. Otherwise, in today's "golden age" of seed industry e-commerce, a "bubble fate" will not be impossible.