Friday, March 29, 2024

Are farm machinery dealerships doomed?

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Why are we so suspicious of buying direct from China through platforms like Alibaba when almost everything in our shops comes from China?

Why do we have so many new car dealerships, machinery dealerships and electronic shops when the buyers are embracing the world of virtual e-commerce platforms for purchasing everything from clothing to cars?

If we already know what we want, why are we paying for all the infrastructure of sales people and display rooms when we can cut out the middleman and simply buy online?

Why do we have farm dealerships with display equipment sitting in every second town when one big yard in each state supported by direct online sales platforms like Farm Machinery Sales, Agtrader or Facebook Marketplace would be vastly more efficient?

Why do we have four field days with all the costs of dragging equipment around the state, costs that are loaded onto the sale price?  No that’s for another day.

It seems we are running with an old expensive farm machinery marketing system when there is a newer far more cost effective model which would save industry money on already very expensive equipment.

It’s already happening in the car market with Mercedes-benz and Tesla cutting out dealerships and offering a fixed price online purchasing model which takes out the pain of dealing with cars salesmen.

Tesla even offers trade-in valuations online with sellers sending video and photos of the vehicle plus a copy of the service manual. 

There is no reason the big machiney dealers could not do the same or have a mobile valuer on the road doing valuations.

Those farmers who are in a position to buy new are usually rusted on green, red or yellow loyalists, it’s not a question if, but when they upgrade to the same colour.

Why then do they need to talk to a dealer, would it not be easier to pay a fixed global price like Mercedes and Tesla set for all to see and take out the haggle?

No doubt some farmers still like to kick tyres and talk turkey in a dealers yard, but they need to know they are paying for the privilege, just as those farmers who like to lean on the fence at the sale yards watching their stock being sold pay for the privilege in time and yard fees.

But, you ask, what about my trade in, don’t we need dealers to take all our old machinery?

Sure, but you pay for that as well, as they buy at a discount to the private market and selling into the private market via a online platform has got so much easier with the option to post videos and photos and be easily benchmarked against other similar models.

In fact, why hasn’t there been more consolidation with one big farm machinery display village where trade-in equipment can be displayed and field tested and then sold online for a fixed percentage, which would save farmers the grief of even talking to potential buyers? 

But, you say, what about the country jobs and the mechanics, who is going to fix the machines when it goes down if there are no dealers? 

My reply is that all the parts and mechanical services can stay (although parts are mostly shipped out from a central warehouse). In fact what we really need is many more mobile mechanics spread around each state. What we don’t need is new machines sitting on multiple dealership floors with salespeople who need a cut of the deal.

We need a revolution in how we attract, train and retain farm mechanics as the current system is clearly failing to deliver the numbers we need. See my ideas in ‘Labour Shortage’.

The current system locks too many mechanics into dealerships and ties support to the sale of expensive machines. It’s ripe for revolutionary change.

All the associated costs of a sale of equipment under our current system get built into the price of the farm machinery. To get those sales transaction prices down we need to follow the Mercedes/ Tesla model and go online.

If farmers desperately need to kick tyres then, forget the field days, why not have one display village in a central location like Northam where one of every make and model can be displayed, along with a large used section for sale on consignment?

It would be like a permanent field day display but no sales people needed, just a link to a buyers portal.

Now that’s a project for the Wheatbelt development commission and the shire of Northam to work on.  Draft the business case and see if a group of farmers or investors will kick in to fund the site.

We simply don’t need so many country dealerships with display stock when we only have 1,000 farmers who buy new. 

We live in a connected world we all have access to Facebook Marketplace, ebay, Amazon etc which have blown the old retainer of bricks and mortar apart.

The new vehicle world has begun to adopt the new model. When is the ag world going to catch up?

If you want more information on the pros and cons of your new ute, or tractor then why would you talk to a salesperson who is not going to tell you the negatives? Far better to simply download the brochure and then go online and talk to other buyers and ask them what they think.

Want customer reviews? Go to any one of hundreds of different blogs as farmers from around the world debate the merits of different machines. 

Even better would be a subscription platform for individual machines where all owners can register their breakdowns, list parts purchased and repairs undertaken at various hours, post videos of how to repair (similar to the old Kondinin Group Reports), allowing potential new and second hand buyers to know what they are in for.  

A nice start up ag-tech idea for someone to run with.

A brave manufacturer coming into a new market would build immense credibility if they were to do that themselves, listing every part purchased online against a machine for all to see what is reliable and what is not.  

Something for the Chinese and Russian manufacturers to consider if they are to break the image problem that currently exists with their local makes and models of farm machinery. Also, a central display village would be a cheap and effective way for them to enter the market to put some additional competition into the industry.

There is an explosion of new brands out there which we have yet to see something I have written on in the past ‘Going Global, The New Farm Machinery Brands.’

No doubt the dealers will dismiss my thinking, but we are in a world of disruption which they themselves are part of. In fact the world of parts supply has already been disrupted when you can compare and contrast parts prices online and order direct from international suppliers.

We need a revolution in how we buy and sell our farm machinery as the hidden costs of an old outdated system are being loaded onto the prices making expensive equipment even more expensive.

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