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Dr. Christopher Oates
Managing Director
Agro Food Resources (Thailand) Co.,Ltd.
has this to say
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Impact of e-commerce on the food industry
Bangkok, September 14, 2000 - Combining the storage
of huge amounts of information and the ability to
retrieve and view that information, and allowing
for financial transactions, the Internet is poised
to make an impact on the way business is transacted
in the food industry.
The impact of e-commerce on the food industry will
be gradual. E-commerce will offer many opportunities
for the food industry, making routine tasks (such
as placing orders, dealing with different time zones,
dissemination of information, etc), easier, more
efficient and quicker.
The size of markets available to a producer will
be larger and he will have more choice in his purchase
decisions. What e-commerce will not do is replace
the food supply chain. In fact, future success of
e-commerce will depend on strengthening and improving
many elements of the supply chain fulfillment of
orders may become a bottleneck, issues of freshness,
quality and transparency will become more important.
The Internet, in general, will influence all levels
of the food industry and supply chain. Business
transactions will not escape this revolution. Customers
following more traditional business paths can better
prepare themselves taking advantage of the wealth
of information available over the Internet. For
example, a food processor wanting to source a food
ingredient, prior to contacting a supplier can narrow
down his options, or explore avenues of new opportunity
- all before making an initial contact with a supplier.
Many food ingredient suppliers have web sites that
serve as a good source of information. This information
will only improve over time as the companies explore
ways to improve their sites and be more interactive
and useful for food formulators - a typical site
will offer technical support, application information,
product information and an archive of research information.
This provides a huge opportunity for Thai food processors
that in the past have had difficulty obtaining this
kind of information.
Many businesses no longer follow traditional procurement
paths, and it is in this role that e-commerce plays
a central role. Business-to Business e-commerce
firms are expected to be the fastest growing sector
on the Internet in the next few years.
According to Internet magazine business - to - business
e-commerce sector is expected to grow from $56.8
billion in 1999 to $118 billion in 2000.
Many businesses, especially electronic companies,
have moved certain processes to the web. Common
processes that have been moved include information
requests and documents, order taking and product
configuration. The advantage of this is the improvement
in ordering efficiency and dissemination of information.
Helping the customer to make better-informed choices
and removing some of the burden in ordering a product.
For the supplier, such as a food company, the move
to a web based system offers the opportunity to
build closer relationships with the customer in
the areas of forecasting and product development.
This will particularly be useful to the food producer/formulator
in determining the needs of the customer and will
result in better quality products.
Elements of the supply chain will be improved through
the introduction of e-commerce as many web commerce
sites attempt to replace the non-digital middleman.
These sites may be specialized in providing a market
place to the food processor, offering ingredients
and other industry inputs. A typical site allows
a user to enter specifications for the required
material; the request is put out at which point
competitive bids are placed for each item. This
provides the supplier with a base much larger than
expected by traditional means.
For example, one website fobchemicals.com boasts
a database of 330,000 chemicals from more than 8,000
manufacturers. The advantages to food processors
are huge; they are now able to source a wide range
of products at competitive prices and are no longer
restricted to the product range carried by the local
agents. The downside is that the company will have
less access to technical support and assistance
in product development - but this is changing.
Food commodities are also traded in the Internet
marketplace, these sites connect buyers and sellers.
This offers considerable opportunity to companies
who want to extend their marketing base and allows
buyers to obtain products specifically suited to
their needs. Transaction costs are lower and the
process considerably more efficient. This new form
of business will provide opportunity for smaller
firms who are able to meet buyer requirements, which
over time will become more specific. Food companies
that are dynamic and prepared to change will benefit
enormously.
E- commerce sites need to provide a means whereby
human contact is mediated and if possible enhanced.
The human approach remains important, successful
sites will allow trading partners to directly interact.
Many customers either before or after placing orders
electronically will often call to bargain the price,
confirm or chase the order. Trust is still needed.
In fact it may be more important than ever.
Websites also need to pay closer attention to international
usability - content must be understandable across
borders, icons or graphics should not be offensive
to another culture and international buyers must
not have difficulty interacting with the site. Specialty
products that are, for example, 'Halal' or 'Kosher,'
can be more widely promoted through active links
to lifestyle and cultural websites.
Thai
Version Click
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