When you surf the web trying to find buyers or trying to sell your products through virtual market places then you will notice there is several virtual market places online. However, few of them are successful. Moreover, Niether Ali Baba or Amazon were able to serve cross border B2B commodity trading for fresh produce traders.
The reason why virtual market places of fresh produce or marketing agricultural produce online fails is that the designers of these virtual market places assume that their buyer will buy as in other classical online models, with their credit cards!
They foreget that the agricultural sector is a complex industry, with each actor has a value in the supply chain. In the agricultural sector. The buyers and sellers are well connected with solid network in the " Supply Chain". Not understanding the value chain is first reason of why agricultural virtual market places fail.
The supply chain of fresh produce is a complex structure. You can not generate demand from a standalone B2B process. Instead you need to consider B2B and B2C. But that is not all the story. The B2B buying process is a result of driven demand from the market.
This driven demand comes from two levels. The Farm aggregators level and , HORECA , & (retail) aggregators. Thus, any virtual market place should design there processes to aggregate the demand from these two levels. The aggregation process will provide a sustainable demand to interested traders.
The "supply chain" , actors in supply, work together to full fill a synergy in the market triple constraints i.e price, quality and time.
The B2B buyers ( importers) should be defined as key players in this supply chain where they perform within a whole network of logistic, cold storages and distribution channels. Those buyers have centralized operation and they largely contribute to the country cross border transactions. Same with Exporters (B2B ) , they are large farms trying to connect and integrate with the supply chain.
Small players and brokers will distort the efficiency and effectiveness of the virtual market place.
Having these facts in mind implies that the B2B fresh produce market places should emphasize vertical added value services such as AI , Blockhchain, cold storage, distributions , marketing, and creative features.
The creative features could include data about seasonal production, supplier review, quality certification, KYC, financing supply chain and securing the quality and payments terms of cross border transaction.
Integration with the key actors in the supply chain is essential to have a successful agricultural virtual market place. The project should be able to integrate trade actors such as leading distributors, inspection companies, logistic companies to one virtual network.
In this way we can understand that the main objective of the virtual market place is to reflect his online presence to physical process by being the key player in this aggregation.
The virtual market place should have food hubs or aggregation facilities. These food hubs aggregate all required services for small farmers.
The aggregation process can facilitate local distribution or can facilitate cross border trading.
Ammar Alshami MSC CSE CME CFA PMP
M.Sc. Economics and Agribusiness