Growing An Internet Market
Remember the days before e-mail, cellular phones and pagers? Seems like a lifetime ago that the only way to the outside world was to "let your fingers do the walking." Nowadays, we spend more time communicating with computers across the world than with living, breathing humans next door. But how much has the greenhouse industry – a steadfast, tradition-based marketplace – embraced technology? How many growers make the virtual world a part of their real world? GPN set out to learn whether certain growers were more technologically savvy than others.
In May 2000, GPN published its fourth annual State of the Industry Report, which was based on 209 growers’ responses to an industry questionnaire. This was the first year GPN included questions about the integration of Internet technology into greenhouse businesses. In pursuit of additional information, GPN phoned several greenhouses – large, medium and small – to find out more.
Making Use Of A Good Thing
Although approximately half of the growers who participated in the survey said they use the Internet for business purposes, it seems that e-commerce is slowly gaining credibility. The overriding majority (76 percent) of survey respondents use the Web for product information (see Fig. 1).
"We use the Internet primarily for research and sending e-mail messages. We have a Web site that customers can access to see the basics," said Dick Bennett of Bennett’s Greenhouses, a 100,000-square foot facility in Lafayette, Ind. "We’re more retail-oriented as far as products. We post specials and update that part of our site weekly. Generally it’s for hanging baskets, geraniums, maple trees, roses, spring bedding flat clearances – the garden-center type things."
Perhaps contrary to the norm, Norm White of White’s Nursery, a 784,000 square foot facility in Chesapeake, Va., said, "We use the Internet for our business quite a bit. The biggest way we use it is in sales, because now we can do a lot of upgrade material with our plants, covering, wrappings and ceramic pots. We can assemble a product and send a digital photograph to the buyer via e-mail. They can have the picture in an hour."
White also said his business is focusing on creating two sites, one for the consumer called gardenlover.com, and one for buyers called whitesnursery.com.
"Eventually, we hope to be selling to the consumer and working with the buyers. We probably will not be doing e-commerce on the buyer’s site. It will just be for information exchange," White said. He added that only a few buyers can be contacted using the Internet or e-mail, which is a main reason he doesn’t use it more in his business.
The GPN survey indicated that the largest number of Internet users were located in the south (68 percent) and west (65 percent). The smallest number were located on the west coast (40 percent). More growers in central, southern and western states answered that they planned to access the Internet in the next year for their businesses.
Size seems to be a factor as well. Most of those using the Internet for business are facilities that measure more than 500,000 sq. ft. Thirty-two percent of those 100,001 to 500,000 sq. ft. used the Internet for business, and 39 percent of those 50,001 to 100,000 sq. ft. used it.
What do you purchase on-line?
While a majority of growers use the Internet in day-to-day business, a much lower percentage actually use it to purchase greenhouse supplies. Of the 52 percent of respondents who use the Internet, less than 10 percent have actually bought items in any of the various categories listed (see Fig. 2).
There seems to be a reluctance on the part of both growers and suppliers to change. Suppliers have not been quick to offer products and services over the ‘Net, and growers have not been quick to ask for them.
White explains, "We haven’t purchased many of our supplies on the Internet because we still have sales people who stop by. I think as some of the sales people retire and some other things change, you are going to find this process changing quite a bit. I know the Ball Seed Company has their system up and running and some other companies do too. But we’re not using the Internet to do a lot of purchasing at the present time. It’s just convenient for our own salesperson to stop by for our order."
One of the things that has made e-commerce inconvenient for many growers is time. While they find it easy and convenient to gather information about a product using the Internet, they find the opposite to be true when actually purchasing a product.
Dan Totushek of 1,000,000 sq. ft. Dan and Jerry’s Greenhouses in Monticello, Minn. describes the process as "cumbersome." "We tried purchasing plant material on the Web, but to be honest, at this point, it takes more time than a phone call. I know eventually it’ll be cheaper and more convenient, but it hasn’t quite clicked for the industry yet."
Not surprisingly, the growers who seem to be making the most purchases over the Internet are growers who have more than 100,000 sq. ft. of production space. People with larger operations are using this resource the most, with 15 percent of respondents in the 500,000 sq. ft. and up category having already purchased seeds/plant material over the Internet.
Gauging Internet Impact
The same reluctance respondents expressed about buying products over the Internet also seems apparent in the number of respondents selling products over the Internet (see Fig. 3). A majority of responents (61 percent) indicated that they do not currently sell their products over the Internet and that they have no plans to do so in the future.
Interestingly, the responses show a definite trend when categorized by size; more large growers sell their products over the Internet than small growers. Of those respondents with 25,000 sq. ft. of production space, none currently sell their products over the Internet. Nine percent of growers with 25,001 to 50,000 sq. ft. use the Internet to sell products, as well as five percent of those 50,001 to 100,000 sq. ft., 14 percent of those 100,001 to 500,000 sq. ft., and 16 percent of those more than 500,000 sq. ft . And the reverse is true for growers who have no plans to sell their products over the Internet: 63 percent for respondents with greenhouses 25,000 sq. ft. and under, 66 percent for those 25,001 to 50,000 sq. ft., 65 percent for those 50,001 to 100,000 sq. ft., 53 percent for those 100,001 to 500,000 sq. ft., and 45 percent for those more than 500,000 sq. ft.
P.J. Ellison of 200,000 sq. ft. Ellison’s Greenhouse in Breham, Texas is a perfect example of the problems many growers are finding with selling their products via a Web site. "We are just getting our Web site going. We’ve had people interested in articles or information. So, in the beginning, it will be for information only. In a year, or hopefully even less, our retail division will be using it for e-commerce."
White’s situation is common not only with greenhouse industry Web sites but with most Web sites. Consumers remain suspicious about buying things on-line, so many sites are for information only. To purchase the products that you see on the company’s Web site, you have to phone or visit the company.
Another problem with making the leap into e-commerce is that there are not many numbers to back up the investments. Few growers actually have had their sites open for e-commerce long enough to gauge response, but that doesn’t stop them from having high hopes or from trying it. White’s site, called gardenlover.com, allows consumers to shop for nursery items from a number of garden centers. "This site holds a lot of promise," says White. "It has been very good for our existing garden center and is working real well." The shopping cart has only recently been added to the site, though, and it will take a while before he can judge the effects of having an e-commerce site.
Most growers interviewed by GPN indicated that there will probably continue to be increasing integration of the Internet into the greenhouse industry. CEO and president of Growzone, Chuck Bland is virtually positive e-commerce is going to take off.
"Our Web site (which is an e-commerce site targeted toward commercial growers and buyers) has been up and running for 14 months. The environment has been stable. We continue to put modifications and enhancements on the site to make it easy to use. Most of our success has been at trade shows where we’ve been able to get in front of customers and suppliers and explain what we’re doing. It’s a complicated sell because the industry is sold out right now. Suppliers are basically selling everything they can make. It’s hard to convince them to do this," he said.
Growzone.com has three services. The site provides a Web site for retail garden centers called Yournursery. A retail garden center can sign up with Growzone, which gives that garden center the ability to conduct business over the Web.
The second service allows a grower to post product availability and take orders over the Internet. Growers can provide a password-protected site that only customers can access and order from.
The third service, Greenbuyer, for which Growzone is most widely known, is a virtual marketplace for a large number of growers. This marketplace has many suppliers and buyers. The site is most used on the hard goods side and also the green side, where growers can sell excess product.
"The green industry does well without widespread use of information technology. They really have a firm grasp on their business. What prompted us to form Growzone was that we saw technology still hasn’t been widely applied, which creates a tremendous opportunity."
He added, "Our tag line is ‘we provide the tools to help you grow.’ We’re really trying to deliver as much technology as someone wants to use. What this Web business has learned in 14 months is that the industry has a certain way of doing business and whatever technology solution you provide them is going to have to conform to that."
Because the Internet is still considered a new business avenue for the greenhouse industry, the most interesting and promising numbers are really not who is currently using or not using the Internet, but who has plans to do so in the near future. In every Internet-related response, the number of people who plan to use, plan to buy, and/or plan to sell via the Internet was at least double those that are currently doing that activity.
These numbers suggest that growers are starting to accept the Internet as a useful tool. GPN’s 2001 State of the Industry Report will retain Internet-related questions, helping us better understand what trends may be forming. Analysis of these data and other pertinent information will be published in 2001.