Jun 17, 2020
How to implement e-commerce in a food or farm operation

Sales of food and agricultural products direct to the consumer through e-commerce have also been increasing, most recently due to the COVID-19 pandemic.

In March 2020, 31% of U.S. households, or roughly 40 million, used online grocery services like home delivery and pick-up, according to retail consulting firms Brick Meets Click and ShopperKit.

This is more than double the number of monthly users from August 2019, when the firms estimated 16 million Americans had shopped online. Total monthly order volume among users surged 193% and monthly order rates were up 19% compared to August 2019.

Even for business owners that recognize how e-commerce can benefit their farm business, there are numerous considerations behind the decision to strategically utilize e-commerce beginning with the choice of platform to use.

Not all businesses will necessarily benefit from purchasing an e-commerce platform. It is possible that simpler models of taking orders and payment over the phone or using online forms to place orders with payment by card or cash at time of pickup or delivery will be a better fit for overall business goals and available resources.

If e-commerce aligns with your long-range business plan, the following issues should be reviewed as you assess platform options.

Online store traffic and anticipated number of transactions. Estimate the return on investment from the implementation of an e-commerce platform. If you anticipate low- to moderate- transactions from online sales, investing in an expensive e-commerce platform with numerous features may not be wise.

Cost and fees. Each platform will have its own pricing structure, with most charging a monthly service fee beyond any initial set-up fee. Ensure that you know whether the platforms you are considering are displaying monthly fees with or without payment transaction fees, if they exist.

Features and ease of use. Numerous e-commerce platforms have been designed specifically for agriculture with the purpose to address the unique needs that come with food products and farm and food business models. However, you should base your decision on which platform to use on your individual needs.

All available e-commerce platforms will offer different features and compatibility with an existing website. Some features will be integral to the platform while others will be optional. Prior to reviewing any e-commerce platform, outline the features that are vital to you.

Initial set-up time. E-commerce platforms vary in their complexity and the platforms they are built upon thus impacting set-up time. Inventory will be the most time-intensive to set up even if your current point of sale system can be easily linked to your website and online store. Once you have your online store stocked, take the additional step of testing.

Inventory management. Beyond the initial set-up, consider how the inventory for your online store will be kept up to date. Depending on the e-commerce platform you choose and any existing point of service that you have, product inventory numbers will either be synchronized for your brick and mortar location and online store, or you will need to regularly update your online store with product availability information.

Mobile compatibility. Mobile commerce has taken off as ownership and use of tablets and smartphones has increased. Any e-commerce platform that you consider should be mobile-friendly. Use free trials or demos to ensure mobile compatibility and ease of use.

Maintenance and support. A self-hosted e-commerce solution can become complex and time-intensive to manage but may give you a certain level of control that third-party platforms may not match. A third-party hosted solution removes most of the technical maintenance and support concerns and can have you up and running more quickly than a self-hosted system.

Payment methods and security. Accepting orders online requires the ability to accept credit cards or other payment alternatives such as PayPal or Venmo. Security and privacy are crucial when accepting online payment. Customers need to know that their information will be confidential and safe while ordering from your business.

Customer service. The platform you use should make it easy for your customers to create an account, find what they want, pay, and facilitate communication. Internally, you need to be prepared for providing online customer service and for resulting orders.

Internet connection. Accessing your e-commerce website is usually no more bandwidth-intensive than accessing and managing your existing website. The two tasks that require adequate bandwidth are managing the images in your online store catalog and downloading the transaction and accounting data.

Committing to and implementing an e-commerce platform is not inconsequential. Make sure you fully understand what you are subscribing to and ensure that the functionality that you require for your business to operate successfully is included.

For more recommendations on e-commerce operations, visit https://extension.psu.edu/managementconsiderations-for-implementinge-commerce-in-a-food-or-farmbusiness.

— Brian Moyer, Penn State Extension

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