For the startups in the agri e-commerce space, managing the food value chain to build customer’s confidence is essential for engagement.
Both developed and developing countries are experiencing a shift in consumers’ patterns. Consumers today are increasingly concerned about the content of their food, its origin, freshness, and safety.
Demand for buying locally and organically grown food is gaining momentum. While e-commerce has had an impact on every industry, but the full presence is yet to be felt in the agriculture sector.
In developed markets, online bulk orders of fresh produce are already a norm amongst businesses such as restaurants and wholesale retailers. However, amongst consumers, a change in the buying behaviour has been seen in the light of the current COVID-19 pandemic, where most of the consumers began the online purchase of fresh vegetables, fruits, and meat.
There is tremendous potential for agri e-commerce businesses, but they will need to overcome barriers around customer’s preferences and concerns around buying fresh produce online.
Transparency and trust between the buyers (consumers and businesses) and sellers (farmers) will go a long way to mitigate concerns of customers and motivate them to shift to online purchases with agribusinesses.
For the startups who are planning to venture into the agri e-commerce space, managing the food value chain to build customer’s confidence around the quality of produce, food safety, and best value is essential for customer engagement.
Pre-orders through customer aggregation and demand forecasting
Balancing demand and supply is of utmost importance to avoid wastage in the food value chain. Pre- accumulation of orders from large buyers such as wholesale retailers and restaurants and small buyers such as individual customers, is a way to efficiently plan the demand-supply situation based on the future stock volume requirement.
Crofarm is one such Indian agri e-commerce venture, that gets an aggregate demand from the buyers ahead in time and notifies the farmers about the harvest requirement based on the secured demand. Since the order volume is pre-planned, therefore the delivery from farm to consumers/buyers only takes 12 hours.
Pre-orders can be incentivised amongst the buyers by group buy promotions. This is one such practice followed Dropee (Malaysia), that enables higher savings, especially for business and retailers.
Additionally, in case of extra produce, the regular customers can be notified two or three days in advance about the availability. This way, all the products can be transferred together during the pre-planned dispatched cycles saving any additional operational cost.
Once pre-accumulation of orders is efficiently embedded in the supply chain, agri e-commerce startups can then use data analytics to forecast demand for future consumption requirements to increase sales. Freshket (Thailand) is one such agribusiness firm that uses demand forecasting for the same purpose.
Decimating uncertainty about product quality
One of the challenges faced by e-commerce businesses is to mitigate concerns about the quality of the product. Such concerns are more pronounced amongst agri e-commerce customers, who need assurance about the nutritional value of the food.
A strategy for addressing this concern is to incentivise farmers to share their crop production journey with customers. The farmers who provide proof and detail of the seed quality, crop nutrition, farming technique, etcetera can be honoured with high-quality premium badges from the agribusinesses.
While at one hand, this will assure customers about the quality of the food, but on the other hand, it will also justify the premium price paid for the product as per the nutritional value. GoFarmz- Know your farmer (India), provide detailed information about the farmer who is cultivating a particular product, to ensure customers about the quality of the organically grown food.
Another strategy to build trust amongst customers is to enable them to provide feedback about the quality of delivery from a respective farmer. This will serve as a motivator for farmers to increase sales through quality products and packaging.
Enabling food traceability
Food traceability is another way of building a consumer’s/business’s confidence in agri e-commerce startups. With the food traceability feature in the e-commerce platform, consumers can track the live status of their product at any stage of the supply chain.
Food traceability is also important to ensure food safety and operational efficiency. Therefore, an agri e-commerce startup that invests in minimising food safety problems is seen as trustworthy by the consumers. Ninjacart (India) will soon be launching end-to-end food footprint traceability for fruits and vegetables, which will provide details about the farmer; a warehouse that handled the produce; trucks that carried the item, etc.
Servicing customers via various communication channels
Customer convenience should be the centre of customer engagement strategies. Apart from regular communication channels such as email, hotline number, Facebook messenger, small businesses should provide continuous support and quick revert through Whatsapp.
The agri e-commerce platform should connect the buyer with the seller (farmer) to build a trustworthy and long-lasting relationship between them. Trust is important to both farmers and consumers on an agri e-commerce platform, and higher transparency translates to long-term business and consumer satisfaction. E-commerce platform such as Lazada connects buyers with sellers and enable them to seek information regarding a product.
Assuring quality products through stringent quality checks
A higher rate of a product return from customers can harm the reputation of an agri e-commerce startup. It also accounts for a higher cost of delivering a replacement or a refund. Quality control at a purpose-built facility enables the to grade produce and discard any defects.
Alternatively, agri e-commerce businesses can employ a third-party verification team to save the operational cost of physical control checks. Lima Links (Zambia) outsources quality control to farm leaders and farmers.
However, this approach has a problem that the less-skilled farmers might be inclined to ship even a low-quality product, which can potentially harm the reputation of the Agri e-commerce business.
Managing the customer side of the food value chain involves providing improved nutrition and quality product. An agri e-commerce startup will have to be sensitive to the growing customer’s need for good quality food that is affordable and acceptable.
Apart from the above-mentioned steps, an agri e-commerce startup should aim to build a strong farmer community that is well equipped to meet the nutrition demand of the customers.