E-commerce applications in agriculture

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E-commerce applications in agriculture

Post  Admin on Thu Aug 12, 2010 11:46 pm

The web allows many uses that can be combined in many ways. For example, displays may be static or animated, search for specific products may be assisted by a search function, sound may be added, payment by credit card may be possible, encryption may enhance the security of transactions, etc. The result is an evolving,
diverse set of e-commerce uses and business models. Amid the diversity and change, patterns of e-commerce practices in agriculture are emerging. What provides order to the diversity is not so much technological capabilities and constraints as it is economic interests and necessities that are as valid on the Internet as in other markets. therefore group agricultural e-commerce sites into four categories according to the economic purpose they apparently serve:
Saving transaction costs
A transaction comprises flows of information, of merchandise, and of money. In conventional transactions different media are involved in the three flows. For example, there are physical displays signaling the availability of products, vision and touch for their inspection, print to communicate the terms of exchange, and paper and
metal as means of payment. In e-commerce, however, all information, money, and sometimes even the merchandise too, are transformed into binary digits or bits, which can be sent through the Internet over long distances at the speed of light and at zero marginal cost.
Cost savings from e-commerce can be substantial. For example, transaction costs in the banking industry are reduced from $1.30 for a counter transaction to $0.27 for an online transaction (NUA, 2000), and the Fordotor Company expects to reduce its purchasing costs from $100 to $10 per transaction by using its newly developed purchasing platform (Wirtschaftswoche, 2000). Cost savings from e-commerce in agriculture have not yet been reported, but there is no reason to expect them to be smaller in agriculture than in other industries.
Sometimes savings in purchasing costs from e-commerce are accompanied by price discounts. Since physical services and products cannot be delivered through the Internet, only parts of the transactions costs are saved. Digitized information products, in contrast, are prime candidates for e-commerce .

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