Farmer dissatisfaction with marketing and prices for wool was one of the factors behind Wool Production Technology's (Woolpro's) development of systems to facilitate an Internet trading community.
"Combined with that, we had [in October 1998 when the concept was mooted] recently had a Foresight review that pointed out the virtual necessity of getting into e-commerce," says development manager Paul Stanley-Boden.
"We clearly had to consider how we were to use the Internet to help farmers."
Many sheep farmers are in remote locations and have little flexibility finding buyers for their wool. They are largely limited to live auctions and buyers willing to travel to the farm to discuss a deal in person. This has been reflected in the prices on offer.
They are an ideal market for an e-commerce solution. E-commerce also offers the potential of minimal movement of the wool. With a conventional transaction it may go through a warehouse and other intermediaries; with e-commerce, it can stay on the farm until the buyer collects. A comprehensive trail of the progress of bids can be kept online.
The objection that buyers may want to see what they are buying is not really valid, says Stanley-Boden.
"The wool that goes on the Net can be totally specified" in text and figures though this needs a network of "service providers" around the country, able to appraise the wool. These are an element of the system almost as important as the electronic link, he says.
An important difference between wool trading and trading of other goods is the size of the transaction.
"The average sale is about 20 bales, which could be around $12,000," Stanley-Boden says. "I wish we could use credit cards for payment", but such amounts are clearly beyond most credit-card limits.
A special payment mechanism has been arranged with the ASB Bank. When the deal is struck, an invoice is sent online to the buyer and a "transaction file" is sent to ASB, which processes the payment with buyer's and seller's banks.
International banking is a minefield, he says, and for that reason the trading community still does not have any purely overseas-based members. "It would be nice to have the payment cleared more promptly", but all banks have a standard six working days for clearance.
Wellington company The Networking Edge was used to help in the choice of a supplier, and Woolpro settled on Glazier Systems, subsequently taken over by the Advantage Group.
The system is based on Microsoft's IIS server, version 4, Transaction Server and SQL Server 7.0.
"Of three companies bidding, two were taking the Microsoft line, and the other talked about using [locally developed] Jade. It's not an over-complicated system technically," Stanley-Boden says; most of the challenge lies in understanding the wool industry.
There has been some difficulty in interfacing with legacy systems. The wool industry still uses old IBM terminal protocols and structured files.
"But we've built filters to reinterpret the data to that format, so we've not had to change a lot of those legacy processes."
Previous attempts were made to introduce Internet-based trading, but that was when prices were fairly good. Few people want to venture into new pastures when the money is flowing in, he says.
The impetus of harder times was clearly needed.