In a move that could set an example for other aspiring e-businesses, Fonterra subsidiary Fencepost.com wants to turn itself into a money-making concern with a new division that builds websites featuring business tools suited to other sectors of the agricultural industry.
Called Fencepost Web Services, the division will use the technology, skills and applications that the agricultural information portal has developed since it launched two years ago.
Current services include the online tendering systems Live.ex and Prime.ex, classified ads, discussions groups for farmers across all agricultural sectors, links to the Doctor Global healthcare website and a online calculator which enables dairy farmers to estimate the value of their shares in Fonterra from their milk production records.
The new division will offer an entry-level kitset with basic discussion groups and production information. Clients pay extra for tools such as the payment predictor and advanced market information. Fencepost business development manager Neil Taylor believes a major dairy company paying for a full complement of tools and services would spend “in the hundreds of thousands of dollars”.
The other potential market for the division is agricultural businesses with a geographically dispersed group or community of interest — apple and pear marketing body ENZA, for example. Fencepost is building an “ethics portal” within Fonterra’s site, in which an international group of people interested in a topic can share documents, ideas and discussions.
Fencepost was set up to provide free online information and business tools to the dairy farmers who formed the Kiwi Dairies cooperative. When Kiwi Dairies merged with NZ Dairy Group its brief became to provide information and tools to the 13,000 dairy farmers who are shareholders in Fonterra. Meanwhile, the NZ Dairy Group website RD1.com continued selling products to the rural community.
According to web traffic measurer Hitwise, Fencepost gets 50% of all traffic to agricultural websites in New Zealand and is regularly one of the top 10 business sites in the country.
Fencepost chief Kris Nygren says 9000 of Fonterra’s 13,000 shareholders are registered with Fencepost, which is based in Auckland and has 18 staff including six developers. Fonterra shareholders make up about half of Fencepost’s registered members.
“We think it’s a good concept for other agricultural companies in New Zealand. We’ve built the business tools and we think we’re unique in the way we deliver them. We’ve been doing it for two years and we think we can do it for external customers as well,” says Nygren.
“Our selling point is that we have a high-end infrastructure, processes and skills that we can offer at a relatively low cost. By the next dairy year [between June 2003 and May 2004] we expect to be doing half our business outside Fencepost.”
Several high-profile online marketplaces have failed in recent years, including fishing-industry trading site SouthFresh, but Taylor says what makes a marketplace successful is knowing what your customers want and need to run their business.
“We have found Fonterra shareholders to be very discerning and we’re used to coming up against the speed connection limitations.”
He says Fencepost Web Services is also talking to dairy companies in Australia and is in discussions with Trade New Zealand about working together at an upcoming dairy expo.
“We want to take the architecture, people and tools that we’ve created and make them international.”
Fencepost has experience using ATG Dynamo for web development, Interwoven TeamSite for content management, Rational for Quality Assurance and BMC Software for systems management. Business tools are developed in Jade. Most of the hardware infrastructure is leased from Jade, which hosts Fencepost on 16 servers in Christchurch.
Nygren says the use of BMC for systems monitoring means Fencepost Web Services can provide stringent service level agreements to clients.
Fencepost is already providing services outside its Fonterra shareholder customer base. It has had a number of meat companies as clients for a year in a range of capacities. For example, kill data from Dairy Meats and Riverlands is presented back to their farmer suppliers.
Fencepost also hosts www.enzalink.com, a free service provided to all ENZA growers and post-harvest operators. ENZAlink provides access to publications like ENZA Express, ENZA Way documentation and news from ENZA. In future it will provide online grower statements and electronic spray diaries.
From left, Fencepost's CEO, Kris Nygren; CTO,
Malcolm Paul; business development manger, Neil
Taylor; and marketing and business development
staffer Simone Moors.