E-commerce

E-commerce redefines the rules of doing business, its future is spectacular, those who embrace it early will be the winners but the hesitant will be obliterated. This is what New Economy pundits kept telling us while share prices of dot.coms soared. When stock prices dropped sharply in April, 2000, some of the fun was over but that did not spell the end of e-commerce.
E-commerce has penetrated agriculture in California as well as the rest of the world. By 2000, one in 25 U.S. farms had already bought or sold agricultural products on the Internet . Goldman Sachs estimates that 12% of all agricultural sales in the U.S. will be conducted over the Internet in 2004, compared to only 4% in 1999. The advent of e-commerce in agriculture raises many questions: What e-commerce business models are best suited for which agricultural markets? What is the impact of e-commerce on farms, agribusiness firms, markets, and rural communities? Are there only winners or are there losers too? If so, who are they? What will government do to, with or against e-commerce in agriculture? And, what should leaders in agriculture do to ready themselves and the industry for e-commerce?
Since e-commerce is still evolving, it is too early for definitive answers. An inspection of current practices, however, suggests that distinct patterns are emerging in agricultural e-commerce and what we see already may help foretell future developments and impacts of this new way of doing business. This Issues Brief provides some background, some current facts and some interpretation of the role of e-commerce in agriculture.
The concept Whether agricultural or not, we define e-commerce simply as business transactions conducted over the Internet. This definition allows for many different ways of conducting business. Transactions may involve material goods, immaterial services, or rights and obligations. Payment may be online or off the Internet. Access to Internet communication channels used in e-commerce is often open to everyone but is sometimes restricted, and the messages exchanged may be rigidly standardized, as in Electronic Data Interchange (EDI).E-commerce transactions are often classified according to the partners involved – consumers, business, and government. With three types of partners, six combinations are possible but only two are presently important: business-to-consumer (B2C) and business-to-business (B2B). Of the two, B2C e-commerce currently receives most public attention.