E-Commerce Compressing Margins for Ag Retailers

Online agricultural retail startups are compressing margins for traditional ag retailers through increased competition and price transparency. A new report from CoBank shows that while e-commerce platforms remain a relatively small portion of the overall ag retail marketplace, growth in the segment has been significant in recent years and will continue to increase. A CoBank researcher says traditional ag retailers that “successfully embrace the challenges introduced by e-commerce will succeed as tomorrow’s cutting-edge ag retailers.” E-commerce platforms that lack a physical footprint will struggle to fully serve farmers, especially in the tight and uncertain time windows of production agriculture. Some traditional ag retailers have already begun responding to the challenge by doubling down on their service and distribution capabilities while building their own online presence. Only a small percentage of crop farmers are purchasing inputs online today, but that is beginning to change. In 2017, USDA figures show that only 25 percent of crop farmers purchased inputs online, up from just 16 percent in 2013.