B2B Agriculture E-Commerce Primer

Prepared by Department of Food & Resource Economics,

University of Delaware, CANR, and Innovative Exchange, Inc.

Overview: What is E-Commerce?

Popularly, e-commerce is thought of as conducting business over the Internet. To put it all in
perspective, lets address commerce first.
The Elements of Commerce
When you get down to the actual elements of commerce and commercial transactions, the
details boil down to a finite number of steps:

Product or service
Place from which to sell
Marketing
Accept orders
Accept payment
Fill orders
Accept returns
Customer service

Overview: What is E-Commerce?

E-Commerce Sales Channel
In an e-commerce sales channel you find all of these elements as well, but they change
slightly. You must have the following elements to conduct e-commerce:

A product
A place to sell the product
A way to get people to come to your website
A way to accept orders normally an online form of some sort
A way to accept money normally a merchant account handling credit card payments
A fulfillment facility to ship products to customers (often outsourced)
A way to accept returns
A way to handle warranty claims if necessary
A way to provide customer service

Overview: What is E-Commerce?

B2B & B2C
Firms that do business on the Internet, whether exclusively or part of a broader business,
generally fall into two categories: B-to-B and B-to-C.

B-to-B is short for business to business and applies to transactions between firms

B-to-C, or business to consumer describes firms that sell goods or services to a final
consumer, usually a member of the general public.

Overview: What is E-Commerce?

E-Commerce Hype
A huge amount of hype surrounds e-commerce. Given the similarities with mailorder commerce, you may be wondering why the hype is so common.
The Dell example:
Dell is a straightforward company that, like a host of others, sells customconfigured PCs to consumers and businesses.
Started as a mail-order company that advertised in the back of magazines and sold
its computers over the phone.
Dells e-commerce presence is widely publicized these days because Dell is able to
sell so much merchandise over the Web.
Dell sold about $14 million in equipment every day in 2000, and 25% of Dells
sales were over the Web.

Overview: What is E-Commerce?

E-Commerce Hype
The Dell example
Does this matter?
If Dell were to lose 25% of its phone sales to achieve its 25% of sales over the Web, then
it is not clear that e-commerce has any advantage, unless:

What if the sales conducted over the Web cost the company less?
What if people buying over the Web tend to purchase more accessories?
What if, in the process of selling merchandise over the Web, Dell lost no sales through its
traditional phone channel?

Overview: What is E-Commerce?

The Lure of E-Commerce

Lower transaction costs

Larger purchases per transaction
Integration into the business cycle
People can shop in different ways; websites offer these new features:

The ability to build an order over several days

The ability to configure products and see actual prices
The ability to easily build complicated customer orders
The ability to compare prices among multiple vendors easily
The ability to search large catalogs easily

Larger catalogs
Improved customer interactions

E-Commerce and Farm Direct Marketing

Throwing Numbers at You
2007 Farm Computer Usage and Ownership (US Department of Agriculture)

Farms using computers for their business increased 3 percentage points from 2005 to 35
percentage points in 2007.
In 2007, 80% of U.S. Farms with sales and government payments of $250,000 or more have
access to a computer, 78% own or lease a computer, 66% are using a computer for their farm
business, and 75% have Internet access.
For farms with sales and government payments between $100,000 and $249,999, the figures
are: 70% have access to a computer, 66% own or lease a computer, 51% are using a computer
for their farm business, and 61% have Internet access.
For farms with sales and government payments between $10,000 and $99,999, 62% reported
having computer access, 57% own or lease computer, 36% percent use a computer for their
farm business, and 53% have Internet access.

E-Commerce and Farm Direct Marketing

Throwing Numbers at You
2007 Farm Computer Usage and Ownership (US Department of Agriculture):

High-speed Internet has become much more available to Internet users in the farm sector since
2005.
The proportion of operators using DSL doubled between 2005 and 2007, to 27 percent versus
13 percent.
Cable, satellite, and wireless were each reported as the primary access methods on 7% of U.S.
farms with Internet access, with satellite and wireless methods both at virtually double their
2005 levels.
Dialup was again the most common method of accessing the Internet, with nearly half (47%) of
U.S. farms still using it, down from 69% in 2005.
A total of 55% of U.S. farms now have Internet access, compared with 51% in 2005.
Conducting business on the Internet and usage of toll-free customer service numbers in
MD&DE, 5% in 2007
63% of farms have access to a computer in 2007, compared with 59%
in 2005.

E-Commerce and Farm Direct Marketing

Food and agriculture products can pose particular challenges E-commerce in Agricultural
Industries:

Shipping
Seasonality
Convenience vs. personal connection
Consider the costs

E-Commerce and Farm Direct Marketing

Other Approaches for E-Commerce in Agriculture
Augmenting existing customer relationships and making it easier for these local customers to
patronize your business.
B2B:

Direct sales to restaurants

Direct sales to other farm markets
Direct sales to schools, hospitals, & other institutions
Corporate gifts

Farmers market preorders

Delivery services
CSA (Community Supported Agriculture) shares
CSA weekly extras

B2C:

E-Commerce and Farm Direct Marketing

Identify Internet Marketing Objectives
Before getting started, it is important for marketers to identify Internet objectives and
determine what can be gained by direct marketing farm products on the Internet.

Save time
Save labor
Save money
Save materials
Advertise
Sell product

Internet Market Planning & Aspects of

E-Commerce
Plan Ahead Business Plan, Marketing Plan & Internet Marketing Plan
Starting any new enterprise can be risky. Before investing money, time, and energy in an
unconventional agricultural business, new entrepreneurs should complete personal,
market, project feasibility, and financial evaluations.

A business plan
A marketing plan
Internet marketing plan

Farm direct marketing on the Internet provides many opportunities for producers to
expand their existing business
Internet technologies
Various ways to use Internet technology
Website
Online directories
E-mail

Internet Market Planning & Aspects of

E-Commerce
Internet Marketing Without a Website
Internet Directories

Topical directories

localharvest.org
agriculturehealth.com

State Department of Agriculture Internet directories

Local community directories

E-mail

E-mail newsletters
E-mail address everywhere
E-mail lists and updates
Never, ever SPAM

Internet Market Planning & Aspects of

E-Commerce
Developing Your Own Website for E-Commerce
The things that are easy about creating a website for e-commerce:

Creating the website

Taking the orders
Accepting payment

The things that are hard about e-commerce include:

Getting traffic to your website

Getting traffic to return to your website
Differentiating yourself from the competition
Getting people to buy something from your website
Integrating an e-commerce website with existing business data

Planning, Designing & Developing Your

Website
There are several different ways to direct market on the web. Producers must, therefore,
ensure that the solution fits in with their overall marketing plan, with their objectives for
using the Internet, and with their resource constraints.
There three are primary types of websites that an individual producer can choose to develop:

Website to transact sales

Website to distribute information
Website to transact sales and distribute information

Fundamentals Objectives, Target Markets, Products & Services

Objectives of the organization

Needs, wants, and expectations of target markets
Products and services that are being offered.

Planning, Designing & Developing Your

Website
Common Objectives
What is the purpose of your site?

Advertising products & services

Selling products & services
Providing customer service and product support
Providing product or corporate information
Creating and establishing corporate identity or brand awareness

Target Markets
It is important to define every one of your target markets. For each one you will need to determine:

Their needs
Their wants
Their expectations
Appropriate WOW factor

Planning, Designing & Developing

Your Website
Products & Services
It is important to define the products and services you want to promote online. Sometimes
the products and services you offer in your physical store are the same, but quite often
there are differences:

You may have fewer items if you are test marketing, or if some items are not appropriate for
online sales because of competitive pricing or shipping logistics.
You may have more products or services online for example: shipping items out of state, mail
lists, etc.

Planning, Designing & Developing

Your Website
Other Considerations:
The site should be designed to be search-engine friendly

Keywords in keyword and description META tags (Keywords inserted in the coding), page
text, domain names, page titles, alt tags
Different META tags on each page
Keyword density and location
Header tags
Search localization
Hypertext links, anchors
File names
Referring websites
Flash and text in graphics
Website accessibility issues

Planning, Designing & Developing

Your Website
Other Considerations
The site should be designed to encourage repeat traffic:

The more your brand is reinforced,

The more your target markets feel a part of your community,
The more likely they are to tell others about you,
The more likely they are to give you permission to stay in touch,
The more likely you will be the first in mind when they go buy your types of products/services.

Web elements to keep them coming back:

Contests and competitions

Cartoons, jokes, trivia, games
Advice columns, tip of the day
Whats New page
Bookmark this page
Calendar of events
Blogs
Online community
Coupons, discounts, giveaways
Specials and promotions

Planning, Designing & Developing

Your Website
Other Considerations
The site should have viral marketing elements that encourage visitors to recommend your
products or services to others

Word of mouth (tell a friend, send this to a friend)

Pass it on (customers forwarding e-mails to a friend)
Product or service based

The site should include elements to leverage its sales force

Affiliate or associate programs

The site should incorporate permission marketing, in which visitors are encouraged to give
you permission to send them an e-mail on a regular basis

Newsletters
Contests
Notification of new giveaways

Planning, Designing & Developing

Your Website
Other Considerations
The site should be designed to encourage customer loyalty

Members-only area
E-club with offers/discounts/freebies
Appreciate their business

The site should incorporate stickiness, encouraging visitors to stay a while and visit many
areas of the site

Advice columns
Description of products
Discussion forums
News sections
Weekly contests

Planning, Designing & Developing

Your Website
Using Competitor Sites to Your Advantage
There are a number of ways to find your online competitors

Conduct searches with the appropriate keywords

Visit industry-specific Web portals and directories

Analyze the competition

Visual appeal
Content
Ease of navigation
Search engine friendliness
Interactivity
Website stickiness

Review the elements that address the criteria above and categorize them as:

Need to have, essential

Nice to have it if it doesnt cost too much
Dont need or want at any price

Planning, Designing & Developing

Your Website
Storyboard Your Website
A website storyboard can be thought of much like a hierarchical organizational chart in a
business:

Begin with your main page or home page at the top

Under the main page, you have your central navigation bar
Sub pages below that

Planning, Designing & Developing

Your Website
Detailed Website Planning
At this point, you are ready to think about construction. For each page of the site, you will
need to develop content and specific graphics. Your designer will need to work on the
site look and feel and ease of navigation.

You will need to write your text.

It may behoove you to have the copy reviewed and edited by an online copywriter with
experience in grabbing readers attention and getting them to do what you want them to do.
You will need to review and approve, making sure that only the form, not the substance, has
changed.
Content should then be reviewed and edited by an Internet marketer (unless the online
copywriter is writing for that as well).
The Internet Marketer will also develop content for page titles, META tags, ALT tags, headers,
etc.
The Internet Marketer will check for repeat traffic generators,
permission marketing, viral marketing.

Planning, Designing & Developing

Your Website
Detailed Website Planning
The Graphic Designer develops the look and feel in parallel with this effort.
When all of this comes together, site development can begin. The development process
should include adherence to guidelines for:

Content

Text Formatting

Consider contact information on every page

Avoid Under Construction
Include security information
Include privacy policy
Minimize use of background sounds
80% of web users scan text as opposed to actually reading it
Write for scan-ability bulleted lists, headers, and horizontal rules to create visual breaks

Colors

Keep online and offline images consistent

Logos, corporate colors, other marketing collateral
Choose background and font colors carefully for readability

Planning, Designing & Developing

Your Website
Navigation

Consistent location
Navigation bar that links to all the major pages on every page
Get anywhere on the site in three or fewer clicks
Site map if you have more than eight major sections
Internal search tool if the site is very large

Graphics

Combined size of text and graphics should not exceed 50kb

Use descriptive ALT images
Use thumbnails when appropriate
Avoid image maps
Avoid flash intros

Test site in multiple browsers

Test on a Mac and a PC
Test with varying screen widths
Avoid scrolling text

Test download time. Users rarely wait beyond 15 seconds to download a site
Ensure there are no dead links

Visual

Other

Planning, Designing & Developing

Your Website
Being Search Engine Friendly
Organic searches

85% of people using the Internet use search engines as their way to find information.
Most important web elements on a web page for organic search engine optimization:

Page text
Title tags
Keyword META tags
Descriptions META tags
Alt tags
Hypertext links
Domain names
File names
Headers

Paid inclusion

With pay-per-click campaigns, you are guaranteed to be indexed by the search

engines, up to the number of pages you have paid for, within a
short, defined period.

Planning, Designing & Developing

Your Website
Deciding between optimization and pay-per-click

Limited advertising budget

Website that cant be modified
Need immediate results
Guaranteed top placement
A need to change ad content or training
Ad-averse audience

Planning, Designing & Developing

Your Website
Options for taking payments

Storefronts
Shopping carts

Out-of-the-box software
Software provided by the hosting company
Build your own system

Refer to your shopping cart considerations handout to help you select a solution

Planning, Designing & Developing

Your Website
Payment Gateways/Merchant Accounts
Lets briefly run through the nuts and bolts or the process of online sales using credit cards:

The customer visits your site.

Customer clicks on a buy me button after reviewing sales copy.
The selection is added to the shopping cart.
At Checkout, the customers personal and financial details are recorded via a secure form.
Details on the form are transmitted to a payment gateway service, which is separate from the
cart. The gateway service securely routes the information through the relevant financial
networks.
If the transaction is successful, the customers credit card account is debited and your merchant
account is credited.
Once all funds have cleared, you are able to transfer money
to your ordinary business checking account.

Planning, Designing & Developing

Your Website
Payment Gateways

A payment gateway is a separate service and acts as an intermediary between the merchants
shopping cart and all the financial networks involved with the transaction, including the
customers credit card issuer and your merchant account.

Payment Gateway Issues

Gateway compatibility
AVS protection

Gateway Compatibility
AVS (Address Verification) Protection

Planning, Designing & Developing

Your Website
Merchant Accounts & Third-party Credit Card Processors
When selecting an Internet merchant account provider or third-party processor, you should
address these fees:

Statement fee
Application fee
Setup fee
Discount rate
Mid-qualified and nonqualified rate
Transaction fee
Monthly minimum
Reserve
Charge-back

Planning, Designing & Developing

Your Website
Alternatives to Merchant Accounts (P2P)
P2P or person-to-person payment services keep track of funds available to both the buyer
and the seller. The buyer and seller (or service provider) both need to have accounts
with the P2P service.
The most popular P2P service is PayPal, though there others are attempting to work up
market acceptance. Public acceptance of P2P payment services is the main drawback of
using this type of service as your sole payment method.
Primary Benefits of P2P:

P2P accounts are usually very easy to get.

Purchase transaction approvals are typically straightforward (either the funds are available or
they are not).
Funding accounts and moving funds out of an account are usually fairly simple.

Primary Drawbacks of P2P:

Do not have universal public acceptance.

May give the purchaser less confidence in the seller (ease in obtaining
a P2P account compared to a merchant account).

Planning, Designing & Developing

Your Website
Domain Registration
What is a domain name?

A domain name uniquely identifies a website. Typing a domain name (also called a URL) into
your browser allows you to visit that site.

Anatomy of a Domain Name: You most often see a domain name listed as www.webixi.com

The center part, webixi

This is the unique part of the name. It represents your company or brand name. It is how you will be
branded and known on the web.
The last part is called the extension

What do the different extensions represent?

.COM Abbreviation for commerce currently available to all

.NET Abbreviation for network currently available to all
.ORG Abbreviation for organization currently available to all
.GOV Abbreviation for government reserved for government agencies
.EDU Abbreviation for education reserved for educational institutions

Planning, Designing & Developing

Your Website
Domain Registration and Hosting
Website Hosting

A web hosting service generally provides server space for your files or website
In addition, website hosts can provide a range of services that can be tailored to your needs and your price
range. One example is e-mail.

Web Hosting Selection Criteria

Dependability and backup

Bandwidth
Statistics provided
Price
Reputation
Management and maintenance
Security
Software
Support

Planning, Designing & Developing

Your Website
Types of Web Hosting Services

Shared server (virtual server)

Dedicated servers (rented server)
Collocation (owned server in a remote location)

Conclusions
An E-commerce website can be the next step for your business strategy to increase your sales
presence in your specific marketplace. Implementing an e-commerce site represents a
new strategy for business growth. You have an opportunity to expand your marketplace
and reach new goals with your company.
Questions?