Abstract
AbstractOnline marketplaces could help direct-to-consumer (DTC) farms compete for customers making grocery purchases on the internet by reducing the search and transportation costs of in-person DTC transactions. While in-person DTC marketplaces have been conducive for metropolitan farms historically, we explore whether rural DTC farms, with distance-based challenges accessing customers, are more likely to have online platforms. We find that rural farms distant from metropolitan counties that are new to DTC marketing are 7% more likely to have online marketplaces than more experienced rural farms, while new metropolitan farms are less likely to have them.
Highlights
In an argument popularized in The World is Flat, decreasing communication costs have enabled firms to sell goods to consumers at increasingly greater geographic distances (Friedman, 2005)
Post-2009 metropolitan farms and post-2009 adjacent farms are less likely. If these trends persist, the proportion of distant rural farms with online marketplaces may increase relative to the proportion of metropolitan or adjacent farms. This phenomenon could be occurring if the decision of post-2009 distant rural farms to enter DTC marketing is premised on online marketing, since this coincides with a period in which broadband availability increased at a greater rate in rural areas than in urban areas (Barnes and Coatney, 2015)
We provide new evidence that online marketplaces may be strategically important for rural farms that are new to DTC marketing and lack cost-effective access to densely populated urban DTC marketplaces
Summary
In an argument popularized in The World is Flat, decreasing communication costs have enabled firms to sell goods to consumers at increasingly greater geographic distances (Friedman, 2005). In this vein, technological advances within the past decade, such as greater internet availability in rural areas and improvements in online transaction software, could have helped farms sell agricultural products via the internet directly to consumers. Online marketplaces can potentially reduce the transaction costs that consumers and farms experience when undertaking in-person direct-to-consumer (DTC) transactions at, for instance, on-farm stands and farmers markets. Online sales can reduce the search costs of DTC transactions. In addition to DTC sales, population density facilitates direct sales of food by farms to retailers like supermarkets and restaurants (O’Hara and Lin, 2019)
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