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E-Commerce: A New Business Model For The Food Supply/Demand Chain

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  • Kinsey, Jean D.
  • Buhr, Brian L.

Abstract

The use of electronic commerce for quality control and cost cutting efficiencies by the food and agricultural industries in the United States is the focus of this paper. The food industry engages in e-commerce through 1.) Internet shopping for consumers called business-to-consumer (B2C) e-commerce 2.) Business-to-business (B2B) Internet market discovery exchanges used by food suppliers at any point in the supply chain, and 3.) Business-to-business (B2B) relationships that reduce costs and increase efficiencies in the procurement, storage and delivery of food to retail stores or distribution centers. This third use of e-commerce is the most highly developed and widely adopted. It allows retailers to share information about consumers' purchases and preferences with food manufacturers and farmers and for tracking food products' characteristics, source, and movement from production to consumer. This circle of information allows high quality and consistent products to be consumed at lower prices. This paper is about the development of e-commerce in the food industry, the economic concepts and goals that it meets, and the changes it brings to the industry. E-commerce both fosters and demands vertical coordination. It favors consolidation of firms. It changes the business culture from one of adversarial relationships to one of cooperation and trust. It changes the historical supply chain into a supply/demand loop while it lowers the cost of food. Policy issues arise around monopoly power, privacy, a diminution of variety, and the demise of small, undercapitalized firms.

Suggested Citation

  • Kinsey, Jean D. & Buhr, Brian L., 2003. "E-Commerce: A New Business Model For The Food Supply/Demand Chain," Working Papers 14320, University of Minnesota, The Food Industry Center.
    • Handle: RePEc:ags:umrfwp:14320
    DOI: 10.22004/ag.econ.14320
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    References listed on IDEAS

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    7. King, Robert P. & Jacobson, Elaine M. & Seltzer, Jonathan M., 2002. "The 2002 Supermarket Panel Annual Report," Supermarket Panel Reports 14356, University of Minnesota, The Food Industry Center.
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    Cited by:

    1. Peter L. Stenberg & Mitchell Morehart, 2012. "The existence of pent-up demand for rural broadband services: an exploration," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), Entrepreneurship, Social Capital and Governance, chapter 9, pages 221-240, Edward Elgar Publishing.
    2. Peter Stenberg & Mitchell Morehart, 2011. "Broadband Internet Use by Economic Actors in Rural Regions," ERSA conference papers ersa10p1469, European Regional Science Association.
    3. Stenberg, Peter L. & Morehart, Mitchell J. & Vogel, Stephen J. & Cromartie, John & Breneman, Vincent E. & Brown, Dennis M., 2009. "Broadband Internet's Value for Rural America," Economic Research Report 55944, United States Department of Agriculture, Economic Research Service.

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