Selling Agricultural Products to Consumers Online through Marchel by goo

3.1 Challenges identified while operating Marchel by goo with farmers

We had many opportunities to interview farmers about Marchel by goo and were able to identify certain challenges of handling agricultural products for online sales via any service (not just Marchel by goo).

(1) Problems with delivery

Due to higher delivery costs, inexpensive vegetables sold via Marchel by goo are priced higher than those sold in nearby supermarkets. This delivery-cost problem is not easy to solve; however, solving high delivery costs in a limited area could provide a significant competitive advantage. During our investigation, we found that there are many online-sales services that do not target the entire country but focus on certain parts of the country.

Another solution is to sell more expensive vegetables that are hard for the consumer to find nearby instead of selling inexpensive products. Crops produced by organic farming are often sold through direct-to-consumer distribution. Although the area devoted to organic farming is currently small in Japan compared with other countries, it has been reported that many consumers are willing to purchase organic food even at a slightly higher price because a certain level of added value is recognized by them. We believe the organic food market will expand further in the future.

Delivery slips can be converted to data and printed by those who are information-technology literate; however, many sellers are unfamiliar with the process, leading to problems due to errors while writing slips. To address this issue, some of our competitors established a system that allowed them to provide support to sellers locally. Another issue is the high hurdle to integrate delivery slips with major delivery companies via an application programming interface (API), which requires several thousand transactions per month.

In response to the above issues, Marchel by goo provides a mechanism for farmers to write about their commitment to their products in their blogs so that customers (buyers) can appreciate the high value of those products even if they are a little expensive. Therefore, the customers can empathize with the passion of the farmers and purchase the products. We are also striving to address the issue regarding delivery slips in consultation with a startup company.

(2) Number of orders and inventory control

Marchel by goo handles many small orders; however, many farmers want to sell their produce in large quantities. If a system to meet this demand was implemented, such as taking large orders and delivering them to each household, it would be worth the challenge since it would help solve the problem of high delivery costs.

(3) Self-branding

It seems that customers who buy vegetables from Marchel by goo tend to be more concerned with who they buy from than what they buy. In other words, rather than simply buying agricultural products, they also feel a sense of support for the farmers. Information disseminated by farmers is interesting and often includes content that leads to interesting education about food, such as advance preparations for growing crops, the growth process, and stories of hardship such as “Wild animals ate my vegetables!”

4.1 Means of guiding customers to products they want

When a customer searches for a product on the web, if the product has a well-defined name (a proper noun), the customer can discover new or used products that match their purpose and budget through various e-commerce services that appear in their search results and can then proceed to purchase those products. On the contrary, products created by creators are difficult to categorize, since both the product name and its introduction are given in free-text. This situation makes it highly unlikely that a web search will lead to a product. Accordingly, we believe that rather than relying on web searches, it is more important to build so-called social currency, which helps people find products via word-of-mouth on SNSs, blogs, etc. and generates word-of-mouth by bringing creators and fans closer together.

It is also important to create a mechanism for visitors to Marchel by goo to become return customers. For example, a function that quantifies qualitative preferences and recommends products that co-occur with or deviate slightly from those preferences would lead to new purchases. We believe that we need a different method of making those recommendations from that used by a typical e-commerce service.

4.2 Cart abandonment and diversifying payment methods

For any e-commerce service, it is a common problem that customers put a product in their shopping carts but end up not purchasing it (so-called cart abandonment). One possible reason for this outcome is the time and effort required for settlement. Many e-commerce services accept payment by credit card. However, many more people than expected do not have a credit card; in fact, Marchel by goo has received many inquiries from such people. In response to this problem, a method of payment called “buy now pay later” (BNPL) is becoming popular in countries other than Japan. BNPL allows customers to pay for a product later at convenience stores, banks, etc. after they receive the product without the need to enter credit-card information at the time of purchase. Rather than fine-tuning the user interface (UI) to address the problem of cart abandonment, accepting BNPL will greatly improve the percentage of customers who reach the point of purchase as well as giving younger people an opportunity to purchase products. This type of post-payment settlement is also gradually spreading in Japan.

4.3 Touchpoints and work load of development

E-commerce services can be roughly divided into two parts: the front end, which includes product listings and product details, and the back end, which includes managing inventories, customers, and orders and processing payments. Marchel by goo operates both ends using a proprietary system, so it takes a long test period when part of the service is modified. For example, adding a new coupon function would require a major modification of the system that would involve modifying the entire system. The advantage of connecting the UI and back end with an API is that even if various smart devices or SNSs (in addition to personal computers and smartphones) are set up in the front end, as long as they are connected with an API, the back end will not require major changes. Such an arrangement called headless commerce can greatly reduce development costs. It also provides peace of mind that the back-end system can be left to the experts. Although Amazon, Shopify, and others offer this arrangement, its initial implementation cost is still too high.