Internet + reshapes the circulation mode of agricultural materials, the market will reach hundreds of millions of levels.

Guide reading

The Institute of Macroeconomics in the 21st Century believes that "Internet +" may subvert the original agency distribution model of the agricultural material industry, promote the flattening of the circulation channel, and lead to chain changes in the agricultural material industry and agriculture. In the next five years, the competition and cooperation between agricultural enterprises and e-commerce enterprises around logistics, services and finance will become another main line of development. With agricultural e-commerce as the core, a trillion-level rural market may be formed.

Dai Chunchen, an analyst at the Institute of Macroeconomics in the 21st Century

Internet + 's agricultural materials are forming a new blue sea.

In July and August, Taobao Agricultural material Channel and JD.com Agricultural material Channel were launched successively, marking the official entry of e-commerce giants into the agricultural material front. In recent years, leading enterprises in the production and circulation of agricultural materials, such as Kim Jong-da, Nuopxin, and the national supply and marketing system, have entered the field of e-commerce, and the pattern of agricultural materials leaders vs. e-commerce giants has initially taken shape.

On the one hand, the new normal of agriculture brought about by the transformation of agricultural operators to large-scale and intensive has provided the possibility of profit for agricultural e-commerce; on the other hand, in the long-term face of retail investors in the agricultural industry, such as oversupply of products, many and bloated intermediate channels, homogenized competition and other problems have become increasingly prominent, agricultural materials touch network has opened a breakthrough in the transformation of agricultural enterprises.

The Institute of Macroeconomics in the 21st Century believes that "Internet +" may subvert the original agency distribution model of the agricultural material industry, promote the flattening of the circulation channel, and lead to chain changes in the agricultural material industry and agriculture. In the next five years, the competition and cooperation between agricultural enterprises and e-commerce enterprises around logistics, services and finance will become another main line of development. With agricultural e-commerce as the core, a trillion-level rural market may be formed.

Reshape the circulation mode of agricultural materials

Compared with consumer goods and other industries with a high degree of e-commerce, the launch of agricultural materials has been delayed by five to ten years, which has something to do with the "difficulty" of agricultural materials market, but the more important driving force comes from the upgrading of agricultural industrial structure.

Around 2010, with the acceleration of land transfer as the forerunner, agriculture has entered the era of large-scale and intensive management, followed by the era of "Agriculture 3.0" represented by Agricultural Informatization and Internet of things big data.

On the one hand, there is a large-scale concentration of land, and large-scale agricultural operators such as large farmers, farmers' professional cooperatives, family farms and agricultural leading enterprises continue to emerge; on the other hand, under the background of attaching importance to the construction of the ecological environment, the Ministry of Agriculture proposed for the first time at the beginning of the year that China's agriculture should reduce the use of chemical fertilizers and pesticides by 2020 and achieve zero growth in chemical fertilizers and pesticides. These two changes constitute the new normal of China's agriculture at present.

This new normal has a great impact on the current "retail economy" and the circulation model adapted to it. For a long time, the main body of agricultural production and operation in China is mainly hundreds of millions of small and retail investors, whose typical characteristics are small scale of operation, extensive mode of production and scattered plots. At present, the agent distribution model adopted by circulation relies on the development of small and retail investors. In this model, agricultural products from the factory to the hands of farmers, need to go through regional agents, cities and counties, townships, villages and other multi-layer channel merchants.

This agent distribution model has led to two major "pain points" of price and quality in agricultural production:

First, the price is high. The prices of agricultural products have been increased through multi-stage intermediate circulation links, and the gross profit margin is extremely high, which makes farmers bear excessive prices.

Second, it is difficult to guarantee the quality. Due to the low entry threshold of the agricultural material industry and the high dispersion of the industry, it is difficult to supervise, resulting in fake pesticides, fake chemical fertilizers, set seeds and other quality and safety problems emerge in endlessly. Taking pesticides as an example, the Ministry of Agriculture collected 1086 pesticide samples from 21 provinces in China in August this year, and 130 unqualified samples were detected, with a failure rate of 12.0%. Among them, 74 fake pesticides were detected (marked active ingredients were not detected or other pesticide ingredients were added without authorization), accounting for 6.8% of the total number of tested samples and 56.9% of unqualified samples.

In theory, e-commerce has the possibility of relieving the "pain point". Farmers place orders online, and agricultural products are delivered to farmers by manufacturers or provincial agents. There is no technical problem with this flattened circulation. In addition, the supervision and credit evaluation system of e-commerce platform can also ensure the quality of agricultural products to a large extent. However, in the past, there were few small and retail orders and the need for decentralized distribution, so it is not realistic for e-commerce to sell agricultural materials. With the arrival of the new normal of large-scale and intensive management of agriculture, agricultural e-commerce has the realistic possibility of making a profit.

Up to now, there are mainly three types of agricultural e-commerce platforms: one is the e-commerce platform initiated by agricultural giants, such as the "Nongyi Network" initiated by pesticide enterprise Huifeng shares; the second is the e-commerce platform initiated by agricultural material channel merchants, the "online supply and marketing cooperative" established by the national supply and marketing system; the third is the new version of the integrated e-commerce platform, such as the agricultural materials channel that Alibaba and JD.com have both been online.

The size of China's agricultural material market exceeded 2.2 trillion yuan in 2014, according to the National Bureau of Statistics. The Institute of Macroeconomics in the 21st Century believes that relying on the market capacity of trillion yuan, carrying out value-added services around the e-commerce platform, and relying on the brands and channels of the e-commerce platform to realize the one-way flow of "agricultural materials into the village" to the two-way flow of "commodities to the countryside and agricultural products to the city" will build a trillion-level market.

Get rid of the stubborn problems of agricultural material distribution model

The deep-rooted agent distribution model is not only the basis for the survival of the agricultural material industry, but also an inescapable giant in the development of agricultural e-commerce. The current situation of agency distribution mode determines that in addition to playing the two cards of "cheap" and "Wumart", agricultural e-commerce also needs to face the following problems:

First, the cultivation of farmers' online shopping habits. The reality is that most old farmers form an "acquaintance economy" with retailers in the village or town, and it is normal to buy agricultural materials from acquaintances and enjoy the agrotechnical services of acquaintances.

Second, the problem of "credit" in the agricultural material industry. Farmers lack sufficient working capital and often use future harvests as collateral to buy chemical fertilizers, pesticides and other products on credit. Coupled with the fierce homogenization competition, "selling on credit" has also become the active choice of some channel merchants. It is not uncommon for farmers to buy retail stores on credit and subordinate channels to buy superior channels on credit.

Third, the problem of competing for profits between e-commerce platforms and distributors. E-commerce platform bypasses the intermediate link to avoid price increases, which is bound to snatch the original source of customers from distributors. If the low-cost products sold on the e-commerce platform coincide with the coverage area of the agents, it will greatly impact the sales of the agents and may suffer the risk of being blocked collectively by the agents.

Fourth, the problem of logistics distribution. Different from ordinary consumer goods, most agricultural products need to take special logistics channels, and the layout of traditional agent distribution channels is complete, but how to integrate is a great challenge.

Fifth, the problem of technical service. The need for technical guidance is another characteristic of agricultural materials that is different from other goods. In traditional distribution channels, farmers can have professional technical guidance services in the field, and it will take time for e-commerce platforms, especially "outsiders" such as JD.com and Alibaba, to distribute equivalent technical services.

At present, all kinds of agricultural e-commerce platforms are exploring solutions to solve the above problems. Take Nopsson's "Field Circle" as an example, relying on the original agency dealers to transform into regional workstations and rural experience centers, to solve the problems of service, logistics and benefit distribution with dealers. Recruit "Brother Tian" and "Sister Tian" who can surf the Internet and understand technology to provide purchasing agents and technical services. In addition, Nuopxin has launched the agricultural micro-loan platform "Agricultural Development loan", pointing directly to the "credit" problem.

The Institute of Macroeconomics in the 21st century believes that in the current oversupply of agricultural products, relying solely on the low-price strategy will make agricultural e-commerce fall into a vicious competition similar to that of traditional channels. The key for agricultural e-commerce to win the future is to construct integrated solutions for crops and varieties, and to lay out products, supply chains and rural finance with services as the core, and to build an interactive ecological chain online and offline. Agricultural materials leader has the advantages of distribution network and technical services throughout the country, which needs to be transformed into the momentum of e-commerce strategy. As for JD.com, Alibaba and other "unapproachable" e-commerce giants, joining hands with agricultural enterprises with complete distribution networks, or competing for talent groups that have ploughed deeply in rural areas for many years, will become their future development direction.

For government departments, in addition to improving the rural transportation system and strengthening the supervision of agricultural products, we also need to issue a series of standards and guidance for qualification approval, logistics and distribution, and rural micro-loans, in order to build the growth environment of agricultural e-commerce.