�鶹app

by Kristi Ruggles

If a farmer would today search for a tractor at Amazon.com, he would find a sandbox toy. In fact, if he were looking online for a new piece of farm equipment, he would have only one option that operates outside of dealerships and manufacturers: AgFolks.com.

Agfolks identifies itself as the only marketing platform of its kind for the farm equipment industry. It distinguishes itself from other online channels by selling only new equipment from multiple manufacturers.

It is a space with remarkable growth potential.

“Almost anything can be purchased online today, everything from groceries to automobiles,” said Bill Reed, owner of AgFolks.com. “It seems like there are no limits, yet the ag industry lags behind.”

In the 2019 Business Profile & Financial Performance Report, only 1 percent of member companies who took the survey reported using direct internet sales to market equipment.

“That was alarming to read,” Reed said. “We have an emerging generation of farmers, especially among the biggest farm operations, who are online shoppers. Their internet access is always improving, and their smart phones are ever-present tools in their workdays. �鶹apps often shop while they sit in the cabs of their self-steering tractors. It makes sense, because that is when they identify what they need to do their jobs more efficiently. Manufacturers need to be positioned to capture those sales.”

Reed said farm equipment manufacturers see this potential but hesitate; the questions that surround direct internet sales can be daunting. We explore those questions in this Q&A with Reed.

Ag Innovator: Describe what you do.

Reed:  AgFolks is an ecommerce site for farm equipment where manufacturers manage their own products. Each manufacturer has a portal to the site so they can control what products are represented on the site as well as the retail pricing for each item. The site attracts new customers through a robust strategy that includes inbound marketing techniques. Dashboard reporting tracks activity on the manufacturers’ product pages.

We make it simple. We do not charge upfront costs but rather charge after the sale is made. The manufacturer determines how the farmer gets their product. It can be shipped directly or delivered through dealers.

We sell in five major categories with many subcategories. Those five broad sales areas are crop and tillage, hay and pasture, livestock and fencing, lawn and garden, and finally, forestry and land maintenance.

Our purpose is straightforward: We build relationships with the best farm equipment manufacturers to get equipment to the farmer in the most economical way possible.

Ag Innovator: What’s the No. 1 reason manufacturers hesitate to sell online?

Reed: One of the misconceptions manufacturers have about AgFolks online sales is that it will disrupt their current distribution network. Manufacturers do not want to gamble with losing a dealer.

AgFolks encourages a manufacturer to retain and grow their distribution network. Dealers will always be a part of the mix, but as dealerships consolidate, or as major tractor makers set up agreements with dealers that force some implement makers off the lot, some manufacturers find themselves without options for dealers in several adjoining counties. Expanding their market reach to these areas through online sales may be the best—perhaps the only—choice.

Even for manufacturers whose distribution market is more balanced at dealer locations, adding direct internet sales poses little or no risk to disrupting its wholesale distribution channels, because the sale can include the dealer. The online sale often captures an opportunity in which both the dealer and manufacturer may have missed out.

Ag Innovator: Why wouldn’t a manufacturer sell equipment through its own website?

Reed:  Well, they have a few things to consider if they want to begin online sales independently. Among them are cost, freight, and taxes.

Ag Innovator: Let’s start with cost. Offer a comparison between launching independently and launching through a service like AgFolks.

Reed: The cost of a basic ecommerce site starts at around $25,000 and could run as high as $100,000, depending on how robust of a site a manufacturer wants. They also will encounter monthly and annual fees for site hosting, for example, site maintenance fees, and software subscriptions. These add up to thousands of dollars in annual fees. Every organization is different, but it is not out of the ordinary for a company establishing an independent ecommerce site to want to dedicate an IT employee to the task and want to expand the capacity of its workforce to include a web editor, marketer, and customer service personnel. They also will need to build new accounting methods to record online sales. 

Through a service such as AgFolks, the cost is spread out among multiple manufacturers. There are no start-up fees and no monthly or annual fees. The only costs are after a sale.  A manufacturer can place as many products on the site as they choose; some manufacturers have multiple product lines and brands.

Ag Innovator: We often hear members talk about freight challenges. What would they face related to online sales?

Reed: Freight is certainly top of mind for manufacturers. With driver and truck shortages, freight carriers have more leverage and greater discretion in choosing what they haul. Carriers prefer a square box that is stackable and not oversized to maximize space in their trucks.

In fact, there was an incident recently in which a truck driver arrived at a manufacturing plant to pick up a shipment, but he left without it. The driver emailed a photo of the freight to his terminal office, and the office supervisor told him to leave, even though the equipment had been booked and was neatly strapped to a pallet. It weighed fewer than 1,000 pounds. That is a cautionary tale. Fewer trucks will serve bulky equipment.

AgFolks handles freight. We have negotiated competitive freight rates with an online freight broker with application programming interface (API) capabilities, so manufacturers can get instant freight quotes online. Not many LTL carriers provide this service. Some manufacturers prefer to use their own trucks or own carriers, and they can continue with that if they choose. If that leads to a savings on freight, the manufacturer can retain the savings or pass it along in the sales process.

Ag Innovator: Talk about taxes.

Reed: Since the Wayfair legislation in South Dakota, many states have adopted an online sales tax requirement, and most other states have plans to implement online sales taxes soon.

Tax rates vary by state, and in some cases, there are local taxes, too. Tax software programs can help but are expensive. The programs tend to include annual or monthly fees, and they charge transaction fees every time a tax is computed, whether or not the sale is finalized. Those costs add up quickly. AgFolks was able to make costs more manageable by buying a bulk package of transactions.

Manufacturers selling independently online will need to register in every state where they sell, and tax returns must be filed in every state where a taxable event occurs. AgFolks is registered in every state, which eliminates that step for manufacturers.

Ag Innovator:  What about sales tax exemptions?

Reed:  �鶹apps have access to both federal and state sales tax exemptions when buying equipment. At the state level, as with sales tax, exemptions vary. Exemptions require forms and certificates to be filed, sometimes annually. Manufacturers selling online must be able to offer the exemptions not only for farmers but also nonprofits and government agencies. There is software available, but the price tag can be steep. AgFolks allows customers to use existing exemptions, or they may file online for an exemption certificate. AgFolks assists with the filing for an exemption online, and once it’s done, all qualified customer purchases are automatically exempt.

Ag Innovator:  Does AgFolks offer financing?

Reed:  Yes, we offer a couple of online options to farmers. Depending on the applicant’s credit rating, it may only take a few minutes for approval, and the rates are attractive.

Ag Innovator: Our members continue to succeed using their traditional marketing models, yet they also face new challenges in marketing their equipment. What sales advice do you have beyond ecommerce?

Reed:  It is true. There are a variety of marketing channels and options, and unfortunately, we are in an environment in which we add marketing channels far more than we subtract. The work requires smart and sophisticated targeting to find the best audience for your products. A brand and marketing mix could include email blasts, e-newsletters, Facebook ads, Twitter posts, Google Ads, video on YouTube, print media, farm show attendance, industry-related conferences. The list goes on.

In the end, manufacturers must meet their customers where they are, and today, those points of connection are more individual than ever before. It is all the more reason, in my opinion, to enlist a trusted partner in sales rather than go it alone.