Extension offers tips for implementing e-commerce in a food or farm business

April 22, 2020

UNIVERSITY PARK, Pa. — Sales of food and agricultural products direct to the consumer through e-commerce is on the rise, especially in response to the COVID-19 pandemic and subsequent recommendations for social distancing and stay-at-home orders.

In fact, during March 2020, 31% of U.S. households, or roughly 40 million, used online grocery services such as 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,” said Brian Moyer, education program associate with Penn State Extension’s energy, business and community vitality team.

For those farm and food operations that have not ventured into the e-commerce world, there are numerous considerations behind the decision to strategically utilize e-commerce, beginning with the choice of platform to use, noted Sarah Cornelisse, senior extension associate in the Department of Agricultural Economics, Sociology, and Education.

“Not all businesses necessarily will benefit from purchasing an e-commerce platform,” she said. “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.”

However, if e-commerce aligns with your long-range business plan, Cornelisse and Moyer offered the following recommendations:

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

• Cost and fees. Each platform will have its own pricing structure, with most charging a monthly service fee beyond any initial set-up fee. Be sure 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 of addressing 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.

E-commerce platforms will offer different features and compatibility with an existing website. “Prior to reviewing any e-commerce platform, outline the features that are vital to you,” Moyer said. “Some of the features you’ll encounter include inventory tracking and notifications, pack lists, customer history, and email support, among others.”

• Reports. Consider a platform’s compatibility with your existing point of sale and accounting software. E-commerce platforms commonly include integration with popular accounting software but confirm this if this aspect is a requirement for 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 linked easily to your website and online store. Once you have your online store stocked, take the additional step of testing.

• 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. However, 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,” Cornelisse said. “Make sure you fully understand what you’re subscribing to and ensure that the functionality that you require for your business to operate successfully is included.”

Penn State Extension offers more recommendations on e-commerce operations at https://extension.psu.edu/management-considerations-for-implementing-e-commerce-in-a-food-or-farm-business.

 

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Last Updated April 27, 2020