Making an online transaction is simple
When you sign on to do business at XSAg.com, the first step is registration. The company validates your e-mail address and bank account, and certifies that you have the required licenses to do business (both buyers and sellers of ag chemicals must be licensed by their states).
Let's say a farmer finds the product he's looking for, places a bid, and his price is accepted. Once the agreement is struck, the Bank of America removes the required funds from the buyer's bank account and places the money in an escrow account.
Next, XSAg arranges for freight using an automated system that quotes rates, and the trucking firm is sent to the seller to pick up the product. Upon delivery, the buyer has 48 hours to inspect the shipment and accept it. Once the product is accepted, the money is electronically transferred from the escrow account to the seller, minus 2% - XSAg's profit.
"In a simple auction, the buyer pays the freight, but it's at cost and it's quoted online," explains Marc Crawford, company chief information officer. "In a name-your-price auction, freight is included in that price, so the seller must meet the price and pay freight."
Security is a primary concern. "Encryption of information begins when you register, and all information remains secure," Crawford says. "Our servers are maintained by Digex, which is located in Maryland and houses more Fortune 500 sites than any other company. When data is in transit, XSAg uses a system called Secured Sockets Layer (SSL) that provides encryption between the customer's computer and our servers within Digex's facility."
Unlike XSAg.com, which is simply a sales facilitator, NetSeeds, Inc. (netseeds.com) is a new-age seed company that sells its own seed directly to farmers throughout the Midwest.
"What we did was cut out all the frills and eliminate the traditional sales infrastructure," says Mark Porter, the company's sales manager. "In effect, we restructured the seed company so we could reduce costs and offer outstanding value. We wanted to communicate directly with the farmer without the middlemen. It's more precise."
Completing a seed purchase takes only a few minutes. Once you're registered and decide on a purchase, you have the option to pay by check, credit card or Deere's Farmplan. Next, you choose a delivery date and time, provide directions to your farm - and within three seconds receive order confirmation and an invoice. Then NetSeeds arranges for delivery.
"At any time, the farmer can go online and check on the status of his order," Porter says. "And we use VeriSign technology and encryption to ensure privacy. Our profit comes from selling on margin, but we don't have to support a multistate sales staff or a lot of concrete and steel warehouses. That's how we deliver value."
A grower who wants to market his crops through CyberCrop.com must register as a user and be authenticated by the company as a legitimate producer. Then he'll receive a trading password. The next stop is reviewing bids from various buyers, choosing a bid he wants and clicking to accept it. Then he'll immediately receive a legally binding contract.
"If a grower wants to bid a different price or negotiate a different delivery date, he can make a counter offer," says CEO Scott Deeter. "Also, the grower can view each buyer's premium discount schedule. We provide tools through Dunn and Bradstreet concerning creditworthiness of buyers. Our profit comes from a transaction fee paid by the buyer - the service is free for sellers."
Concerning site security, many sites go beyond basic encryption techniques and VeriSign technology. At Farmbid.com, CEO Ted Farnsworth hired AnswerThink Technologies to design a proprietary security system to complement the security system at Digex, its server. And at Farms.com, Joe Dales, company senior vice president of marketing, says security is foremost in his approach to e-commerce.
"The issue of privacy and security concerns hardware and software," Dales says. "That takes money, and we spend it. In addition to traditional security techniques, we hired an expert from Federal Express to help protect data and privacy. There are a lot of redundancies." Interestingly, many e-commerce companies decline to be very specific about security systems - it appears the less that people know about their systems the better they like it.