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  • Writer's pictureTim Hammerich

AgTech ‘Disruption’ Creates New Market Opportunities

Innovation continues to accelerate. Why, in an environment of seemingly limitless solutions, do we still have so many problems?

There are many different explanations as to why this might be the case. One that has stuck out to me lately is that innovation often causes new pain points.

In other words, solving one problem often opens the door to new problems we didn’t have (or think we had) before.

Take the case of AgVend, a digital marketplace designed to help ag retailers reach grower customers who are looking to make a purchase online.

Selling online is obviously not a new concept. Even in ag, many startups have attempted to create online marketplaces and struggled in the past. What’s different now?

The biggest difference is that traditional ag retailers in the past had no incentive to offer products online. In fact, it was likely to only invite additional competition to sell to their existing customer base.

This changed when industry disruptors such as Farmers Business Network expanded their strategy of bypassing these traditional ag retailers to sell directly to growers. All of a sudden, there was a pain point for those retailers that prompted them to look for a way to compete with this encroaching competition.

This is one example of a innovation solving some problems, but creating others in the process.

The term “Ag Retail” refers to the companies that supply farmers directly with products such as fertilizer, seed, chemical, or feed. These are not typically the farm and ranch supply stores that suburbanites might be familiar with. Generally, they are a mix of cooperatives, local independent businesses, or larger corporations that serve growers directly. These ag retailers often have sales representatives that office out of their pickup and spend a majority of their time visiting farmer customers. They typically have a facility with tanks and warehouses that store supplies locally that farmers need.

What is innovative and very smart about AgVend is their approach. They partner with selected ag retailers to enable them to service both existing and new customers by offering products online. Rather than trying to cut out the retailer, AgVend partners with and serves these important market participants.

AgVend acknowledges the important role the retailer plays as a trusted advisor to the grower. They use technology to enhance the relationship between farmer and retailer.

Retail has had a rough decade or so. Just ask Toys ‘R Us, Radio Shack, Borders, Sports Authority, and several other large national retail brands that have folded in recent years.

While very different than the now-extinct retail brands mentioned above, ag retailers have faced challenges of their own. In addition to industry disruptors, many input manufacturers have grown and merged, increasing pressure to sell products directly to the farmer.

These challenges prompted ag retailers to consider how they might evolve with this changing landscape. A tool like AgVend allows retailers to sell products using whichever channel their customer prefers (in person, over the phone, or online).

“We call it augmenting the sales team” says AgVend CEO Alexander Reichert. “There are a percentage of purchases that farmers know exactly what they need to buy, and (they’re) looking to see if the (local) retailer has that inventory, and are looking to see the price of that inventory. So that type of purchase is one that makes sense to happen in an online space. We are actually removing the necessity for a sales guy to take the order. When we talk to our Sales Agronomists at our partner retailers, that’s the last thing they like to do. They want to be out there in the field. They want to be giving high value recommendations to the farmer.”

AgVend enables their partners to better serve their farmer customers. Partner retailers have the option to either join the AgVend Marketplace or license the technology to create their very own online storefront for their customers. This focus on real solutions to real problems faced by real people seems to be lacking in much of the agtech conversation. I get excited when I encounter companies like this.

“The most common piece of feedback we get is ‘finally this exists’.” — Alexander Reichert, CEO of AgVend

Co-Founders Alexander Reichert and Eli Rosenburg met when they both worked for another agtech startup, Mavrx. Having already worked in retail, Alexander was intrigued when he was sitting at a bar in Iowa watching a farmer buy toilet paper on Amazon. The farmer revealed that he was making about 95% of his household purchases online due to not having a retail store close by. When asked how many of his farm-related purchases were made online, the farmer said “0”.

Alexander and Eli were convinced that digitizing ag retail had to happen in partnership with traditional retailers, not by bypassing them or cutting them out of the equation. They are now on a mission to empower ag retailers to best serve the needs of their grower customers.

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