Please Keep Your Farm Off Amazon
We are building a new marketplace, for good.
For many entrepreneurs and investors in the tech world, nothing is more exciting than the prospect of building the next Amazon. Started from a garage and exploding into the second largest private employer in the US, Jeff Bezos is right up there with Henry Ford as the American definition of “success.”
But when we created our online marketplace GrownBy, we were running the other direction — away from becoming anything like the next Amazon.
I jumped into tech because I wanted a firewall between the growing influence of companies like Amazon and small farms like my own. I wanted to make sure that the next Jeff Bezos would never call the shots on who would see or buy products from our farm online; they wouldn’t have the power to control our prices — or our family’s income.
I wanted to make sure that the next Jeff Bezos would never call the shots on who would see or buy products from our farm online; they wouldn’t have the power to control our prices — or our family’s income.
A Raw Deal
The Federal Trade Commission (FTC) is suing Amazon for anti-competitive behavior, alleging that the marketplace is competing unfairly with the small businesses it was built to serve. Sellers on the platform are paying as much as 50% of their revenue for participation in Prime, Ads and fulfillment services.
And worse, Amazon degrades the search rankings of sellers who offer lower prices on products that Amazon sells under its own label.
In effect, both sellers and consumers are all getting a raw deal — either because prices are inflated due to Amazon’s exorbitant fee structure or the real deals are hidden from the consumer’s view.
And yet, due to Amazon’s competitive (read: low) pricing and convenience, consumers continue to shop on Amazon for fast deals and even faster delivery.
A Familiar Tale
This situation comes as no surprise to farmers, many of whom rely heavily on others for marketing and distribution and have seen what happens when one company has too much power.
Farmers have been trying to survive under the weight of Smithfield, Cargill, and a slew of monopolistic companies that influence prices and control nearly every aspect of farm production.
An Amazon Alternative
Direct-to-consumer (DTC) sales is a viable alternative to an Amazon or a distribution network. Many farms have employed this model to stay afloat; rather than rely on a middleman — which cuts into profits — farmers do most everything themselves. That means farm production, marketing, sales, and a long list of other things required to run a small business.
But direct sales often leads to exhausted farmers tackling more tasks than they can reasonably manage, and has real limitations on a farm’s growth.
The upside of any distribution relationship is that farmers can focus on production and the distributor handles marketing and sales. When a farmer sells directly to consumers, all of that falls on their shoulders.
On GrownBy, we believe that farmers shouldn’t have to choose between losing their shirt to a middle man or bravely going it alone.
On GrownBy, we believe that farmers shouldn’t have to choose between losing their shirt to a middle man or bravely going it alone. Our goal is to forge a new path where we can leverage online marketplace benefits and maintain a trusted and fair partnership with our sellers.
To accomplish this, we structured our company for fairness, sought out patient and aligned capital, and we design our software with our farmers’ success in mind.
GrownBy’s Cooperative Structure
The first step we took to ensure long-term fairness was to incorporate our company as an agricultural cooperative. With this business structure, our farmers are our only owners and they share in our profits.
Farmers are invited to buy a share after they make a sale, and they can participate in member votes and company leadership. If in the future we decided to add in a fleet of trucks to deliver farm produce, all farmer-owners would benefit.
GrownBy’s Funding
The wrong funding can ruin great companies. The business-as-usual venture model has led tech companies to charge exorbitant fees; compete with their sellers; or just burn out when big growth isn’t realized. It has huge promise — and huge trade-offs.
Our funding falls into one of four categories: private and government grants; mission-aligned individual investors; cooperative investors; and farmer member-owners.
We never accept venture capital because we can’t serve our member-owners with this kind of cash. The cost of venture capital isn’t worth it.
GrownBy’s Design Process
Design helps us serve our farm community. First of all, a simple distinction is that place, or location, is the most valuable aspect of our search.
Because many of our farmers rely on consumers coming to the farm or a community drop point where they sell local and fresh products, each producer on GrownBy gains a significant advantage within their own community. This hyper-local approach helps each farm remain competitive.
Secondly, we prioritize our sellers as much as our shoppers. If a farmer’s products aren’t selling or our software tools aren’t the time saver that we promised, we find a solution together.
Our balancing of farmers (sellers) and shoppers is essential.
Redefining “success.”
Farmers are not the only business owners ready for change. As we witness the evolution of the first generation of internet-based sales platforms like Amazon, there is a budding community of “platform cooperatives” like GrownBy who are looking to redefine online commerce.
These companies include FairBnb, the Drivers Coop and more. These sellers communities represent an exciting new era.
Companies like GrownBy, shoppers, and thankfully the FTC are finally taking a second look at how we define and how we regulate “success”.
GrownBy is the fair & farmer-owned marketplace app to platform your products and give consumers the opportunity to find and buy your farm products.
Build your farm shop on the GrownBy Marketplace for free and start selling your products in less than an hour. Follow along at @farmgenerationscoop and @grownbyapp.
