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years’ time. 30 This reflects an average of nearly $7 000 of online purchases per farm household in year 2000 and $40 000 per farm in ten years time. And a survey by the National Farmers Federation subsidiary, Farmwide, also found that farms are expecting to increase their use of e-commerce (Box 12.1). Box 12.1 The farmwide online services pilot program Farmwide, a subsidiary of the National Farmers’ Federation, conducted a two year pilot program to analyse usage of the Internet by farm families. Under the program, 1,000 farm families were provided with a 28.8kbps modem, installation of an extra telephone line, training and telephone support and were asked to use the Internet regularly throughout the period and then respond to several surveys to help assess usage patterns. Some of the findings of potential benefits to farm families were: • forty six per cent said using online services had changed the way they did business (24 per cent were unsure); • only two per cent did not see online services as worthwhile to their business; • per cent claimed they could access previously unavailable goods and services; • per cent said using online services had not saved them money given the technical problems they experienced throughout the project; • many said the main advantage for their business was in getting quotes online and then comparing prices, rather than marketing their business online; • nine per cent regularly used discussion groups and 3 per cent used chat groups; and • thirty eight per cent of farmers said they would purchase online, 28 per cent said they would sell online (also high levels of uncertainty, 28 per cent and 22 per cent respectively). Some of the findings of potential barriers to farms families were: • costs of access were exacerbated by the lack of local call access and relatively high hourly access charges; and • a small number of people complained about poor quality connections and modem drop-out; Some of the future identified uses of e-commerce for farms families were: • government transactions (e.g. completing forms for excise rebates and tax returns); • education and training for both children and adults; and • online banking. Source: Simpson, R, The Farmwide Online Services Pilot Project, Farmwide, May 1999. 12.2 Cost savings No major studies have been identified that estimate the cost savings or productivity gains from e-commerce for agriculture. However, there is reason to believe that anticipated efficiencies and opportunities in other industries are also available to the agriculture industry. In Buying and Selling Online, an assum<strong>pt</strong>ion is made that Internet usage will reduce farm costs by ten per cent, based on reductions in selling costs and gains in productivity resulting from: • lower transport requirements through disintermediation (also may prove product quality by less stress on product, maximise freshness, etc.); • lower direct marketing costs; and 30 Groves, J. and Da Rin, J., Buying and Selling Online, Rural Industries Research and Development Corporation, January 1999. 176
• increased access to markets (particularly for some niche industries such as horticulture). In reaching these conclusions, the authors caution that Internet take up is more likely on the more profitable or larger farms, which may give those users a further competitive advantage. For e-commerce to be used to its potential, the overriding need in rural Australia is therefore an adequate regional telecommunications infrastructure. Overall, cost savings and productivity improvements are likely to arise from quicker access to more accurate information, such as price and weather information. The lower cost, ease and speed of transferring information between rural users will also benefit agriculture producers. For example, chat rooms and discussion groups are creating virtual communities for dispersed people that facilitate the spread of important information among users. Examples of sites include Farmwide’s online discussion group and the Koninin Group’s forum site. E-commerce will also increase competitive pressures and thereby reduce costs in the farm services sector, as the Chairman of the Australian Wheat Board noted recently: The emergence of electronic commerce is to set to fuel profound change within the [farm services] industry within the next five years. There is insufficient profit in the sector for everyone to survive and the development of the Internet will further erode margins. That pressure is going to get worse as more and more people come on the Internet, as more and more people get the communications systems in place on their farms, which they are doing at a fairly rapid rate. We are going to see more and more competition on the traditional way of doing business. Cathy Bolt, ‘Impact of e-commerce to change rural Australia’, The Australian Financial Review, Friday 14 January 2000. As is the case for other sectors, cost savings should arise from new online marketing channels that reduces marketing costs. So far, this has been confined largely to highly processed consumer goods such as flowers and wine. However, e-commerce also opens possibilities for reducing costs in sales between wholesalers and retailers, as discussed in the box below. Box 12.2 GreenNet Traditionally, plant wholesalers sell products at markets or through trucks laden with samples that do the rounds of retailers. However, GreenNet, a new web-based e-commerce service for horticultural businesses, intends to make the ordering and delivery of plants faster and more cost-effective. The website catalogues each wholesaler’s products and price list. Retailers paying an access fee can then decide what, and from whom, they want to buy and order electronically. Searches for plants can use either common or botanical names, a particular wholesaler or a state. A photograph of the plant is displayed showing price, pot size and grower. GreenNet claims it can reduce costs associated with running trucks, which for some businesses can be $60 000 to $100 000 a year. In addition, wholesalers can reach a much wider range of retailers without the traditional associated costs. Source: Kate de Clerq, ‘A Business blooms on the net’, Business Review Weekly, November 5, 1999, p. 111. Governments have also identified a role for themselves in assisting a wide range of agribusinesses to market their products online. An initiative of the Federal Government is the FoodConnect Australia program which 177
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© Commonwealth of Australia 2000 I
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Table of contents Foreword ........
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Part 2 - Case studies Section One I
Page 9 and 10:
Executive summary E-commerce is sti
Page 11 and 12:
Part 1— economic analysis
Page 13 and 14:
Chapter One Study context, aims and
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Within the business-to-business cat
Page 17 and 18:
Table 1.4 Projected growth in econo
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Chapter Two Economic issues What di
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Exhibit 2.1 Disintermediation effec
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Table 2.1 E-commerce impact on vari
Page 25 and 26:
Chapter Three Changes ahead—indus
Page 27 and 28:
Health Significant efficiencies sta
Page 29 and 30:
Chapter Four Economy-wide assessmen
Page 31 and 32:
Direct changes and flow on impacts
Page 33 and 34:
consumption relative to economic ac
Page 35 and 36:
External competitiveness Greater us
Page 37 and 38:
Industry outcomes Greater use of e-
Page 39 and 40:
Food products The food products sec
Page 41 and 42:
people with differing occupational
Page 43 and 44:
Tasmania and the Northern Territory
Page 45 and 46:
Table 4.2 Regional growth and emplo
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The data for country regions (Exhib
Page 50 and 51:
impacts are a reasonable representa
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Chapter Six Policy implications and
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Appendix A Study methodology, shock
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confidence. This is at the expense
Page 59 and 60:
All of the GDP gain generated by ch
Page 61 and 62:
(s11) Saving of particular inputs I
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Table A.1 continued Commodity Per c
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Table A.2 continued Engine & Boiler
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Table A.2 continued Safety Inspecto
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Table A.3 continued Industries 2007
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B.2 The structure of MONASH The cor
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simulations it is assumed that the
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Table B.1 (Continued) MONASH-RR Reg
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C.2 Forecasts for macroeconomic var
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other grains, iron and non-iron ore
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The numbers in column (II) of Table
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Productivity growth over the histor
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forecast of a 0.1 per cent decline
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Productivity growth in the construc
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Employment prospects in the sector
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Table D.1 continued Textiles, cloth
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Table D.1 continued Health, educati
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Table D.2 continued 45 Bags and Con
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Part 2 — case studies
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Industry sectors’ use of e-commer
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e-commerce were chosen. Key questio
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Banking For some time now most of t
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2.3 Cost savings Banks are keen to
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2.5 Changing business modes Branch
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Banks are also looking to take adva
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NAB, as a multinational, is already
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activities such as consumer electro
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Box 3.2 Building a business on e-co
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One of the issues for all industrie
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108
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Box 4.2 Australia Post and e-commer
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Opportunities are being created for
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Value can be transferred into Austr
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Continued use of email and the deve
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E-commerce allows some flexibility
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120
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are introduced to market at a start
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educe the duplication of assessment
Page 138 and 139: 6.3 Cost savings as a result of ele
Page 140 and 141: The primary e-commerce tools for im
Page 142 and 143: New service modes and channels to t
Page 144 and 145: 132
Page 146 and 147: This Section will review the implic
Page 148 and 149: of greater depth. (It should be not
Page 150 and 151: consumers watch five per cent less
Page 152 and 153: artist is the promotion which airpl
Page 154 and 155: New costs The fragmentation and reg
Page 156 and 157: gambled. The development of Interne
Page 158 and 159: 146
Page 160 and 161: Making a purchase over the Internet
Page 162 and 163: Customers who access troubleshootin
Page 164 and 165: they does not actually sell those i
Page 166 and 167: Key points There are few other sect
Page 168 and 169: e-commerce allows quicker order pro
Page 170 and 171: 9.3 New costs The demand for busine
Page 172 and 173: How a ticket is sold, through an ag
Page 174 and 175: Box 10.1 Case study: E-commerce and
Page 176 and 177: The education and training sector h
Page 178 and 179: 166
Page 180 and 181: 11.2 Production Manufacturing busin
Page 182 and 183: Opportunities for re-intermediation
Page 184 and 185: Value could transfer within the sec
Page 186 and 187: 174
Page 190 and 191: seeks to provide a point of referen
Page 192 and 193: To a small extent, direct selling t
Page 194 and 195: 182
Page 196 and 197: Box 13.1 Austmine—a window for th
Page 198 and 199: Box 13.2 Leaving mining sites for w
Page 200: 188
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