Buyproduce.com Founders Target Agricultural B2B Market
By ALEXANDRA LIN
The Internet revolution could soon arrive in a new and unlikely industry,at least that’s the hope of the men behind an ambitious young Irvine firm.
The company buyproduce.com aims to bring the supply-and-demand efficiencies of e-commerce to growers of fruits and vegetables.
“The goal of this company is to really enhance the relationship between the buyer and seller, in a way that we make the transaction part of it much more efficient,” said Robert Verloop, vice president of marketing for buyproduce.com, which opened shop online in October.
According to a study by Goldman, Sachs & Co., agricultural business-to-business sales on the Internet will reach $123.6 billion 2004, about 12% of all agricultural sales made in the country and about 8.25% of the Internet economy in that year.
Buyproduce.com isn’t the only one that has noticed the market potential of a virtual marketplace to handle agricultural business-to-business transactions. Produceonline.com of Pasadena has a similar business model. Agribuys.com of Torrance handles not only produce, but meat as well.
Greg Flood, president and CEO of buyproduce.com, says his firm is different. Most of its competitors have gone with auction sites or request-for-quotes sites, said Flood, who was previously senior vice president of sales and marketing for Grimmway Farms in Bakersfield. Buyproduce.com has more customized features such as a transactional pricing model, which allows sellers to have different prices for different customers.
“We’re defining the playing field, but we also want to make sure we’re the lead team on the playing field,” Verloop said.
The idea for the company was hatched by two 20-something farmers who came from family-owned farm businesses. Brent Keefer of Keefer Farms (of King City, south of Salinas) sold peppers and onions to Bob Bonanno of Irvine-based Don Bonanno Citrus Company. A typical day for the farmers would consist of non-stop phone calls and faxes back and forth in order to complete orders. The two men thought: there’s got to be an easier way to do this.
They had to figure out how to make the transition from an industry dependent on handshakes to one that depends on modems. It turned out to be easier than they thought. Within a year of talk about starting an Internet company together, Bonanno and Keefer introduced the buyproduce.com web site at the 1999 Produce Marketing Association’s annual conference in Atlanta.
Meanwhile, buyproduce.com received $8 million in October as its first round of funding from Sequoia Capital, which was used to hire the senior management team and customer service representatives. The employee count now is hovering around 87, with more expected to be hired in the coming months. Management continues to make the rounds to trade shows to demonstrate the technology in the hope of getting more retailers and growers to go high-tech.
The company now has some 850 customers.
“Technology has moved to a point now that we think we can facilitate some of the things that are routinely done that doesn’t impact the relationship,” Verloop said.
For example, once the seller and customer have negotiated price or grade, the rest of the work can be automatically done on the buyproduce.com site. Standing orders are filled without the need to pick up the phone. What’s known in the industry as “back of the house” paperwork usually handled by accounts receivable and accounts payable departments will become paperless and more automated.
“What it will do is separate the inefficient processes,” CEO Flood said.
Buyproduce.com makes its money from charging sellers 1.5% of the value of each transaction (capped at 25 cents a box). There are no member fees and the buyers are not charged.
Eventually those buyers and sellers who do embrace the concept of a digital marketplace will have the option to go one step higher on the high-tech ladder. Buyproduce is working with Casio Soft Inc. of San Jose to produce a hand-held computer that will interface with the web site and allow customers to take the information, literally, into the field.
“We’re very excited about this because we think hand-held devices over the next six months are going to become a very strong component technology in e-commerce,” said Jim Delurgio, buyproduce’s chief information officer.
The device, called CSI MobileLink, will allow customers to document shipping discrepancies with a built-in digital camera and allow growers to keep track of inventory without having to sit at a computer terminal. The MobileLink also will be able to upload real-time images of crops to show a potential customer on the Internet.
Verloop is confident that growers will eventually see how much easier it is to hawk tomatoes and avocados on the Net.
“What we’re seeing now is as the industry is going through a changing of the guards,” he said. “This generation is more aware of the power and potential of technology.” n
