Food and agribusiness formed a $5 trillion global
industry supported a 2015 McKinsey
report.With the growing population of seven .8 billion because it stands today to the ten billion projected
by the United Nations in 2057, the market
size of this industry will only get significantly bigger as demand for food
worldwide increases. This massive opportunity has, in turn, generated
tremendous global investment interests throughout its value chain.
Innovation via technology and digitalization are seen as pragmatic solutions to assist address a number of the best challenges facing the worldwide food system. Food
demand is increasing. Suppliers are seeking for greater distribution and access
to the regional or global supply chain. Customers are posing for food traceability,
greater price transparency, also as faster, around the clock access to
information. New digital platforms have emerged in an effort to
deal with these market needs.
According
to AgFunder’s Agri-FoodTech Funding Report 2019, $786 million of funding — or
4% of total investment within the agri-foodtech space
— across 104 deals with a median deal size of 1.5 million was invested in
agribusiness marketplaces last year as global agribusiness moves quickly to
catch up with the eCommerce trends globally.
Who’s developing digital agribusiness marketplaces
and platforms, and where?
Two major organisation profiles emerged once we analysed the prevailing agribusiness
marketplaces and eCommerce platforms. First are startups, based in emerging
markets, seeking to disrupt the industry via digital transformation. They aim to enhance and streamline
procurement processes, provide greater price transparency, and enable
provenance via blockchain technology. Second, are large multinationals or
leading regional foodservice companies like Cargill, US Foods,
Bayer and Nestle.
Agribusiness eCommerce and marketplace startups
are receiving a majority of the funds.
The
2019 AgFunder report reported that the 9 out of the highest 20 ag marketplace
funding visited Asian startups
engaged in marketplace and eCommerce operations — 6 Chinese (Xinliangji, Qdama,
Yimutian, Dafengshou, Just Free and Guoquan Shihui), 2 Indians (Ningacart and
Agrostar) and 1 Japanese (Sorabito). The remaining visited independent
businesses based within the US (3), Brazil (1),
Argentina (1), UK (2), Colombia (1), Egypt (1), Uganda (1) and Switzerland (1).
Many of the highest 20 invested
marketplaces are located in developing countries with strong agriculture
economy. These agribusiness startups engaged themselves to supply different products
and services within the agriculture or foodservice value chain:
Trading
platforms to facilitate sale, leasing and/or rental of agriculture machinery
and equipment;
• Farmers-to-farmers or
farmers-to-restaurants/retailers networks;
• B2C retail and distribution of food and
equipment;
• B2B procurement of wholesale food, grocery
and/or equipment marketplaces;
• Direct sales platform for agriculture inputs,
machinery and replacement parts;
• Agriculture insurance and/or procurement financing;
and
• Crowdfunding or financing for farmers.
There also are other notable
international marketplace players who started their online platforms earlier.
In the US, Agroy is an e-commerce platform founded
in 2011 that lets farmers
connect
with other farmers and find wholesale products from round the globe. CommoditAg,
founded in 2017, offers a web platform of
high-quality farmer products like crop protection and
plant nutritional products to agriculture retailers). Agrellus is a web and mobile
marketplace that brings together buyers and sellers of agricultural inputs,
services and commodities and this company is established in 2015.
In France, Agriconomie founded in 2014, is a web retailer which aims
to become the Amazon of agricultural supplies. Yagro within the uk started off as a web marketplace
connecting farmers with their suppliers and seeks to alleviate the pain points
experienced by farmers within the purchasing and
procurement of inputs by enabling them to request quotes and place orders
online. Today, Yagro offers competitive farmers insurance and real-time
comparative price checks that permit farms anonymously
compare their ag-chem bill with 100% verified prices from the remainder of the market, additionally to operating the
Yagro Marketplace.
Traditional multinational and regional players are
investing in eCommerce and marketplaces.
Multinational or regional agriculture and/or food
service players also are investing into
eCommerce and marketplace platforms to reinforce their existing
operations and increase their B2B customer offering, although the amount is significantly but those of the agribusiness marketplace startups.
In the US, major players like Cargill and US Foods
have invested in deploying their own agribusiness eCommerce and/or marketplaces
last year. Cargill launched a digital platform called myCargill.com in March
2019 with a pilot group of Cargill’s edible oil customers within the US with the
intention of expanding into other food areas, also on its global
customers and supplier base. Its features include online ordering, the power to review order
history and invoices, access to food safety information, and access to food
safety and
merchandise specifications. More capabilities are in planning.
US
Foods, a 24 multi-billion dollar distributor, has done significant business
through eCommerce with 350,000 SKUs and quite 250,000 customers. it's engaged in online selling for the last 20 years,
which was some time past prompted by major
hotel chains who needed 24/7 access to products starting from food products and
cooking equipment for his or her hotel and
restaurant operations, and subsequently to other restaurant chains and outlets
which they service. In July 2019, US Foods Direct, a B2B food sourcing
marketplace was debuted to enrich US Foods’s primary
eCommerce site at USFoods.com with quite 40,000 hard-to-find
specialty and niche food products from independent suppliers and distributors,
and reconnecting them to quite 250,000 restaurants
and foodservice operators. Today, it generates annual sales of $24 million.
Multinational Bayer also launched an agro
marketplace called Orbia last year in October, combined with a loyalty program
for farmers called Impulso Bayer. Under the model, a rural producer
accumulating points at Impulso Bayer can exchange them for products and
services on Orbia. The logic is
analogous to airlines’ frequent flyer programs. This program
presents a catalog with quite 700 different
products and services to a base with 140,000 engaged producers, like 65% of planted area in Brazil.
Although Asia supports the food needs of 60% of the worldwide population in
roughly 23% of the world’s agriculture land, it's surprising that we've yet to ascertain many mid- to
large-sized Asian-based traditional agriculture organisations investing or
launching online agribusiness marketplaces or eCommerce sites. Most of the new
entrants are deployed by Asian-based startups and spread across China, India,
Indonesia (iGrow), Vietnam (MimosaTek), Malaysia (Cityfarm), and therefore the Philippines
(Cropital), with China and India dominating.
Where is that the next wave of
evolution in agribusiness marketplaces?
It is without a doubt that marketplaces will still grow in dominance
as a business model in various stages within the worth chain of the
agriculture industry.
So, what are subsequent wave of trends
impacting this marketplace platform technology? We believe there are a minimum of four areas where we
expect increasing focus, investments and deployments:
1. B2B user expectations are moulded to those of
B2C
There is an excellent upside to being one among the slower market
sectors to start B2B marketplaces. a minimum of 80% of B2B buyers aren't only trying to find but expect a buying
experience like that of a B2C customer. Given many B2B buyers are interacting
with B2C marketplaces in their day-to-day private lives, we'll expect the B2B
customer demand for user experience to grow more almost like those of B2C with a day passing.
Omnichannel communication and a personalization
experience to deliver a convenience and seamless purchasing process seem will
gradually become an
important differentiator to accumulate new customers and
drive customer retention and loyalty.
2. Increasing
adoption of blockchain agriculture
Blockchain agriculture is predicted to grow in
importance as food quality is fast becoming a problem of concern
globally. Imagine the journey our food takes after it leaves the farm because it passes through
numerous hands and processes before getting onto the dining table . Through
blockchain technology, we'll be ready to attain both
provenance and traceability from food source to destination via one single
source of the reality . This empowers all
buyers to possess greater supply
chain transparency and increase consumer trust within the food purchased.
Foodshed and Agrimp are two samples of blockchain enabled
agribusiness platforms. Foodshed uses blockchain technology to make transparency supply
chain, reduce supply chain inefficiencies by connecting local sustainable and
independent producers to local wholesale markets, restaurants and grocery
stores on via its mobile marketing and logistics app. Agrimp may be a B2B cloud-based
digital marketplace for transactions of food crops with complementary services
including logistics, quality inspections, secure payments, and legal support.
Agrimp has introduced blockchain technology to enhance food traceability
and sustainability, and coverage for all the main risks known within the agri-business.
Despite
blockchain’s apparent benefits, it'll take a while for the blockchain
technology to be truly affordable and scalable, especially for adoption within the developing
countries where agribusiness is
critical to the general economy.
3. Expansion of complementary ecosystem products
and services to agribusiness marketplaces
Today, most agribusiness marketplaces started off
being relatively specialized in their value proposition to deal with specific pain
points within the organic phenomenon
. As they scale, they can’t believe being a distinct segment player. Ecosystem
partnerships become a critical competitive advantage with partners providing
augmentative products and services to the various users within the
agribusiness marketplace.
The
large captive user base of a successful marketplace offers massive
opportunities for monetization with limited marketing investments. samples of such complementary
services might
be marketing services, microfinancing, farmer
insurance and financing, food quality assurance and validation services,
warehousing and logistics services or equipment warranty and maintenance
services.
Yagro is that the closest
illustration of an agribusiness marketplace ecosystem that was identified. With
Yagro Marketplace being the key foundation platform, complementary services like Yagro Insurance,
Price Check, Programme Check and Strategic Agronomy are added as a part of an integrated
offering to the farmers.
4. Continuing investments in online marketplaces
with future consolidation
The development of agribusiness marketplaces remains in its infancy
stage compared to other industry sectors (e.g., retail, commodity and industrial)
which has been affected and reshaped by marketplace technology advancements. we'll see a greater
number of latest startups being
founded and investment funding poured into promising startups as they address
technology and provide chain inefficiencies
along the organic phenomenon
.
Future
acquisitions also are likely to occur as
larger-sized traditional agriculture organisations take an increased interest
in these online agribusiness marketplaces and leverage acquisitions to realize faster market entry
vs. building their own in-house digital platforms. However, we don't foresee such
consolidation efforts within the immediate two years
because the general
conservative nature of those businesses will
more likely trigger a monitoring behaviour to spot the optimal
acquisition candidates for the proper time, right place
purchase further into the
longer term .
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