E-commerce For Direct Farm Marketers

E-commerce for Direct Farm Marketers: An Overview of Locallygrown.net and Case Studies of Online Markets in TennesseePrimary FeaturesLocallygrown.net’s software features are designed toemulate many of the marketing activities involved withlive farmers markets. The software’s online orderingcapabilities and reporting forms facilitate the logisticsof complex multi-producer farmers markets or simplermarkets managed by a single farm. Locallygrown.net markets come with a customizable websitetemplate that allows producers to easily design theironline store and begin selling their products to localcustomers. The software supports up to four separatemarketplace accounts for producers, customers,market managers and volunteers. Markets canaccept online credit and debit card payments or allowcustomers to preorder from the online store and payfor their purchase on delivery day.Operating an Online Farmers MarketWith Locallygrown.netIn an online farmers market, during each buying period(usually weekly) the designated market manager (orindividual producer if used by a single enterprise)opens the market and producers upload their availableproducts to their Locallygrown.net store, specifyingprices, quantities and providing product descriptionsfor each item. Customers then have several daysto browse and purchase available products in themarketplace. Throughout the buying period, growerscan monitor their sales, update their product inventory,edit product descriptions, and upload new products tothe online store as they become available.When the buying period ends, customers’ orderinformation is sent to producers by email or isaccessed as a downloadable .CSV file through theirLocallygrown.net market account. Order reportsinclude the customer’s name, contact information,invoice number, time of order, products ordered andpurchase total. Producers then harvest or prepareproducts based on their market order forms.Customer orders are delivered by producers to thedesignated pickup location on the prespecified deliveryday. To help producers package and identify customer4Locallygrown.net Support. How Does the Order Fulfillment Section Work?Information accessed at does-the-order-fulfillment-section-work.orders on product delivery day, the Locallygrown.netsoftware generates printable product labels. Productlabels display the first three letters of the customer’slast name, order invoice number and other pertinentorder information such as product name, quantitiesordered, product weight and farm name (see the StonesRiver Market case study for an example product label).Orders are sorted by producers and farmers marketstaff to facilitate the customer checkout process.Markets can check in producer deliveries andcheck out customer pickups using the paper-baseddistribution reports, or digitally, using Locallygrown.net’s Order Fulfillment System.4 For the paper-basedapproach, the Locallygrown.net software generates.PDF distribution reports to help market staff trackproducers’ delivered orders and customers’ retrievedorders on delivery day. To handle delivery daylogistics electronically, the Order Fulfillment Systemallows market staff to check in producers and checkout customers online using the Locallygrown.netsoftware. If the customer has not already paid for theirorder online, they can pay in person using the form ofpayment that the market accepts (e.g., cash, check,credit, debit, SNAP EBT).5The Locallygrown.net TemplateThe Locallygrown.net software provides markets (bothfor online farmers markets and individual producers)with a customizable web store template containing upto seven unique web page tabs. The seven web pagetabs include:1.2.3.4.AboutThe MarketRecipesWeblog5. Q’s and A’s6. Our Growers7. Sign InEnterprises decide which tabs to use in their onlinemarket, though many include all seven tabs. Eachweb page tab has a general structure that can becustomized with producer and product informationspecific to the market.5Producers can learn more about the Order Fulfillment System by reading thefeatured case study on the South Cumberland Farmers Market.UT Institute of Agriculture Center for Profitable Agriculture5

AboutThe “About” tab is the space in which the marketprovides information about its Locallygrown.netstore (Figure 1). Many Locallygrown.net marketsinclude a mission statement, pictures, market signup instructions for customers, and details aboutonline ordering and product pickup. Some marketspromote special products and services, such ashome delivery options and market gift certificates.The Market“The Market” tab is the areain which producers displayproducts and customersshop the market (Figure 2).Producers can highlight specialand new products in theFeatured Products and What’sNew sections of “The Market”page.The Categories sectionFigure 1. The above image showsthe “About” page of an onlineallows the market to group andfarmers market operating inorganize products alphabeticallyTennessee. The online farmersand by item type to facilitatemarket in this example usesthe customer’s shoppingeach of the seven tabs from theLocallygrown.net template. (Source:experience. Adopting anStones River Market, http://intuitive and consistent namingstonesriver.locallygrown.net/)system for product categoriesand product listings improvesthe customer’s ability to find desired products,which in turn could affect the number of productscustomers purchase. In addition to searching forproducts by category, customers can refine theirproduct search by viewing product offerings fromspecific producers.Figure 2. “The Market”page is the place inwhich customers shopthe market for localproducts. Customerscan search for items bycategory and farm name.(Source: Stones RiverMarket, http://stonesriver.locallygrown.net/market)6UT Institute of Agriculture Center for Profitable AgricultureIndividual product listings contain the name ofthe product, farm name, price per unit, quantitiesavailable (exact or estimated) and a productdescription (Figure 3). Since many customersrely on the product listings in making purchasingdecisions, it is important that product names,images, quantities and descriptions accuratelyportray the items for sale. The software isdesigned so that as customers purchase productsfrom the market, the quantity available decreasesin real time. Producers also have the option ofincluding recipe suggestions and nutritionalinformation with the product description.RecipesThe “Recipes” tab is the section of the marketwhere producers and customers can upload recipesthat incorporate local ingredients available in theonline market. The concept is quite similar to aCSA farm operation that includes recipes usingthe products included in their CSA share deliveries.Recipes can be categorized alphabetically andgrouped by food item. The Locallygrown.netsoftware allows producers and customers to placea “View Available Products” link beside each recipeingredient so that other customers can view whichlocal producers are selling the ingredients throughthe market (Figure 4).Figure 3. The above image shows an example product listingcreated by the producer. As customers complete their orders, theLocallygrown.net software automatically reduces the quantityof available product. In this example, the quantity available hasfallen to one unit. (Source: South Cumberland Farmers re 4. Each recipelisting templateincludes sections fora recipe description,ingredients, step-bystep instructions andcustomer comments.(Source: StonesRiver Market, http://stonesriver.locallygrown.net/recipes)

E-commerce for Direct Farm Marketers: An Overview of Locallygrown.net and Case Studies of Online Markets in TennesseeThe Locallygrown.net software helps marketsbuild a library of recipes based on locally sourcedingredients. The software can track whetherrecipes include ingredients containing links toproducts sold on the market. Thus, when linkedproducts become available on the market forpurchase, recipes using those products asingredients are automatically featured in the“Recipes in Season” section of the “Recipes” tab.Customers can conveniently add products totheir shopping cart while viewing recipes.The “Recipes” web page opens opportunitiesfor multi-farm collaboration and encouragescustomers to actively participate in themarket. Producers can pool their productsto create recipes with predominantly locallysourced ingredients. In addition to sharingtheir favorite recipes, customers can learnabout alternative uses of products sold on themarket. The exposure to new combinations oflocal ingredients may motivate customers topurchase items that they typically would not usein home cooking. Each recipe listing includesa Comments section, giving both producersand customers the opportunity to interact andprovide feedback on listed recipes.WeblogThe “Weblog” tab is used by market managersto engage with customers, make importantannouncements regarding the market, and providenews about local events in the community. Postsin the “Weblog” section are often part of theweekly email sent to customers announcing theopening of the online market order period. Manyonline farmers markets use the “Weblog” sectionto announce new product availability and specialitems and promote profiles of growers whorecently joined the market.Q’s and A’sThe “Q’s and A’s” (Questions and Answers) tabprovides customers with additional informationabout the online market. This is an area formarkets to address product ordering and pickuppolicy, payment options, transaction fees andmembership costs. The “Q’s and A’s” sectionalso may include sign-up information forprospective customers and producers.Our GrowersThe “Our Growers” tab provides a comprehensivelist of all participating producers in the onlinemarket (Figure 5). Producer listings includea space for the farm’s logo, name, location,production methods, number of products offeredin the market and two links (“View Details” and“View Photos”) that customers can open tolearn more about the producer. The informationprovided in the producer listings helps customersmake purchasing decisions. Markets also havethe option of creating a geographical map ofparticipating farms to give customers a visualperspective of each farm’s location (see theStones River Market and South CumberlandFarmers Market case studies for examples).In the “View Details” section, producers caninclude information about the history of theirenterprise, farming practices and links to theirbusiness website and social media accounts(e.g., Facebook and Instagram). As the namesuggests, the “View Photos” section allowsproducers to upload pictures of their farmingactivities and products sold through the market.Because online farmers markets may be deficientin their level of physical producer-to-customerinteraction relative to live farmers markets,the ability to transmit producer informationeffectively through the “Our Growers” sectioncould be paramount to the success of theonline market. The “Our Growers” web page isan opportunity for markets to build a strongerrelationship with their customer base, instill trustand loyalty, and add value to the online marketshopping experience.Thesoftwareisdesignedso that ascustomerspurchaseproductsfrom themarket,thequantityavailabledecreasesin realtime.Figure 5. The “Our Growers” tab allowsmarkets to provide more information tocustomers about the farms participatingin the Locallygrown.net market. Eachfarm selling its products through themarket manages the content of theirlisting. (Source: South CumberlandFarmers Market, http://sewanee.locallygrown.net/growers/list)UT Institute of Agriculture Center for Profitable Agriculture7

Sign InThe “Sign In” tab is the section in which customers,growers and managers create accounts and sign into the market to manage their respective accounts.Locallygrown.netMarketplace AccountsRelative to other e-commerce software options,a distinguishing factor of Locallygrown.net thatfacilitates the organization and management ofonline farmers markets is the ability to createmultiple types of member accounts for onlinemarkets. Locallygrown.net supports up to fouraccount types, including 1) grower, 2) customer, 3)manager, and 4) volunteer accounts. Each memberaccount type has different capabilities andconstraints in the online market.Grower AccountsProducers selling products through an onlinefarmers market will normally sign up as growers,though producers can also be granted managerand volunteer account responsibilities. Groweraccounts allow producers to upload products to“The Market” page and manage their producerprofiles in the “Our Growers” section. Produceraccounts provide access to various marketreporting forms, including historical farm-levelsales data, weekly order reports and printableproduct labels for each ordering period. Avaluable feature of the Locallygrown.net softwareis that producers with grower accounts in oneLocallygrown.net market are able to transfer orduplicate their product inventory to other marketscreated with the Locallygrown.net software.Customer AccountsTo shop the market, customers must create auser account. Each customer signs up online byproviding their name, contact information andusername. In the case of a farm or farmers marketwith multiple delivery sites, customers will alsoselect their pickup location. Customers have theoption of signing up with wholesale accounts formarkets that choose to offer wholesale-priceditems. Customers may also be granted manager orvolunteer account accessibility, if needed.8UT Institute of Agriculture Center for Profitable AgriculturePrior to becoming a market vendor, some onlinefarmers markets require that producers firstcreate a customer account and purchase a certainnumber of products through the online store.Experiencing the online market as a customerhelps producers better understand the onlinemarket’s logistics before selling their products.Manager AccountsUsers with administrative responsibilities act asmarket managers and have the ability to update andedit all aspects of the online marketplace. Individualfarms using Locallygrown.net will typically sign upas the only account manager, whereas an onlinefarmers market with several producers may havemultiple market manager accounts.Members with manager accounts can open andclose the online storefront during each buyingperiod and post messages in the “Weblog” tab.Market managers have access to weekly andhistorical order reports that provide details for eachsale conducted through the market. The historicalorder reports allow management to track sales overtime for the entire market, individual producers orindividual products.Volunteer AccountsVolunteer accounts are primarily used for onlinefarmers markets. Volunteer accounts give marketvolunteers the ability to manage certain aspectsof the Locallygrown.net market. Volunteers haveaccess to market order reports that are used tohelp check in growers and check out customers onproduct delivery day.Payment Methods andPayment PlansAt the time of publication, online markets usingLocallygrown.net can give customers twopayment options:1. Online orders with in-person payment.2. Online orders with online payment.The first payment option allows customers toorder products through the Locallygrown.net

E-commerce for Direct Farm Marketers: An Overview of Locallygrown.net and Case Studies of Online Markets in Tennesseestore but pay for their product in person onproduct delivery day. The second payment optionallows markets to accept online payments fromcustomers with credit or debit cards. To set uponline payments, markets will need to create anaccount with the electronic payment processor,Stripe,6 and follow the step-by-step instructionsoutlined in the Locallygrown.net support page.7Locallygrown.net’s online payment systemallows customers to securely store their creditor debit card information in their memberaccount, eliminating the need to re-enter theirpayment information each time they shop themarket. Further, using the online payment optiongives customers the ability to add credit totheir account (e.g., 100, 200, 300, etc.) andpurchase products until their balance reacheszero, at which point the customer can add moremoney to their account balance. The pre-paidcredit option works similarly to a buy-down CSAmodel in which customers purchase deductiblecredit through the farm and draw down theirbalance as they purchase products during theCSA season.Costs of Locallygrown.netand Fees for OnlinePaymentsAt the time of publication, there is no upfrontcost to create a Locallygrown.net market.However, Locallygrown.net charges a percentagefee based on the volume of market sales.Additional electronic payment processing andsecurity fees will apply to markets that acceptonline credit and debit card payments.If the market only allows customers to orderonline and pay in person, the cost of theLocallygrown.net software is 3 percent of marketsales. For markets accepting online credit anddebit card payments, Locallygrown.net chargesan additional 0.5 percent of sales as a softwaresecurity fee. Markets will also incur electronicpayment transaction fees from Locallygrown.net’s payment processor, Stripe, of 2.9 percentof sales plus 30 cents per transaction.Markets accepting online credit and debit cardpayments should estimate a total softwarecost of approximately 7 percent of sales. Thesoftware costs and transaction fees for onlinepayments for the Locallygrown.net software aresummarized in Table 1.Online farmers markets will incur certainmanagement and infrastructure costs. Thesemay include the staff time and resourcesneeded to administer and manage theLocallygrown.net market and the operatingexpenses to carry out product delivery day.Some online farmers markets charge growersor customers a one-time or annual membershipfee or a percentage of sales to help defrayoverhead costs, similar to a booth fee at a livefarmers market. Markets need to understandthese overhead costs to adequately establishgrower and customer membership fees.Likewise, producers should understand thesoftware costs and fees in order to price theirproducts in a way that incorporates applicablemarket fees and allows for producer profit.The historicalorder reportsallowmanagementto tracksales overtime for theentire market,individualproducersor individualproducts.Table 1. Software Cost of Locallygrown.net and Transaction Fees for Online Payments (Percentage of Sales)6Payment MethodSoftware CostOnline Payment Security FeeTransaction Fees forOnline PaymentsTotalOnline orders within-person payment3%N/AN/A3%Online orders withonline payment3%0.5%2.9% 0.30/transaction 7%Producers can create their Stripe account at stripe.com.7Locallygrown.net Support. How Does the Integrated Payments System Work? Information accessedat e-integrated-payments-system-work.UT Institute of Agriculture Center for Profitable Agriculture9

Benefits and ChallengesThe following section highlights several of the benefits and challenges associated with operating online farmersmarkets using Locallygrown.net. Similar benefits and challenges will also exist for online farmers markets that useother e-commerce software to operate their market (e.g., Local Food Marketplace or Local Orbit). Potential benefitsof selling products through an online farmers market include: Producers only harvest, prepare and deliverproducts that have been sold. Compared to a livefarmers market, producers may not need as muchtime, market staff, marketing and promotionalmaterials, or infrastructure to conducttransactions. Selling products through an onlinefarmers market increases marketing efficienciesand may reduce product waste.8,9 Producers could diversify farm income byexpanding their customer base to consumersegments that value the convenience ofcustomized online ordering and efficient productpickup. Customers conveniently search themarket, read product descriptions and purchaseproducts from their home or office.8,9 Eachcustomer’s order is packaged, labeled anddelivered to a prespecified pickup location. Because customers can more easily find andpurchase a wide assortment of locally producedgoods, per-shopper expenditures may be higher inonline farmers markets. Based on data provided byLocallygrown.net, online farmers market customersspend approximately 40 per market visit. Whereas live farmers markets may focus more onproviding customers with an experience, onlinemarkets are specifically intended to facilitatetransactions between producers and consumers.Some producers may value that online farmersmarkets require less farm-to-customer interactionto conduct sales. As opposed to a live farmers market, onlinefarmers markets are less likely to be subjectedto inclement weather. Because shopping isconducted online and customer orders areprepackaged, labeled and sorted for convenient

E-commerce, in particular, is an emerging tool for direct farm marketers. The e-commerce educational program aimed to give direct farm marketers a better understanding of the basic concepts of e-commerce, software options for online sales, potential software uses, and the benefits and challenges associated with each e-commerce platform.