The online livestock trading system
Business overview
| Location | Portsmouth, United Kingdom |
|---|---|
| Social media | |
| Website | www.sellmylivestock.co.uk |
| Sectors | SaaS/PaaS Mixed Digital/Non-Digital B2B |
| Company number | 08285271 |
| Incorporation date | 7 Nov 2012 |
Idea
Introduction
Launched in June 2014, this unashamedly disruptive business has grown rapidly. It now has over 2,000 registered users who enjoy the ease of use, zero commission charges and a dramatically reduced risk of disease.
The system's back-end functionality generates significant data and offers retailers opportunities to gain market share through the site's unique 'whole life assurance' system.
Private investment and grant funding have supported the business so far, but our plans for phase two growth include the launch of a monetisable automated invoicing and payment system.
Intended impact
Livestock sellers can:
- Trade for free.
- Reach a nationwide audience. Transactions can take place at a time convenient to the buyer and seller, rather than being locked in to auctioneers' timetables.
- Improve profit margins on the stocks they rear. A stressed animal can lose anything up to 8% of their bodyweight while being transported.
- Remove transport costs. Animals only need to be transported to the buyer, not to market, reducing overall haulier fees.
- No longer do sellers have to accept the best price they are offered on the day they visit the market, after paying for the costs of going to that market.
- Transactions take place on a no sale/no fee basis.
- Enjoy ownership of the transaction process.
Livestock buyers enjoy:
- Greater transparency during the selling and purchasing process. Farmers can trade directly with each other on the SML site.
- Easier and a much more comprehensive access to an animal’s complete genetic history via SML’s application which combines real-time industry and government data. One of our key features is that we can offer whole life assurance.
- Access to stock from around the UK.
- Alerts when the stock they’re looking for is uploaded, reducing the need to make trips to markets.
For retailers and consumers:
- The risk of disease is reduced. This is critical in an industry crippled by a string of animal health crises in recent years and currently struggling to cope with TB in cattle and MV in sheep.
- Provenance is revolutionised. The aim of our whole-life assurance feature is to give the supermarket the ability to tell a customer which animal a piece of beef came from, where the cow was born raised and slaughtered and what it had been fed with and any diseases it was treated for.
- We aim to deliver benefits to shoppers through a smoother and more efficient supply chain. And for the provenance conscious shopper, whole-life assurance will bring confidence that the animal has been reared sustainably and humanely.
Substantial accomplishments to date
Technical
- Website has operated for 15 months.
- The system links to a Govt database which allows cattle farmers instant access to an animal’s breeding and movement history.
- The system has the capacity to link to a key industry database, which will enable retailers to offer consumers ‘whole life’ assurance.
- We are planning to launch an automated invoicing and payment system later this year.
Financial
- SML has seen private start-up investment of £150,000 to date and a further £48,000 of funding through an LEP ‘Bridging the Gap’ initiative and £5,000 from Defra for its contribution towards TB eradication.
- £2.2m of traded stock has passed through the site in 2015.
Exposure and awareness
- SML has >2,000 registered users.
- It has attracted widespread media coverage in the mainstream media, including R2, R4, ITV.
- SML’s advisory panel includes a former Minister for Agriculture, A former Vice-President of the NFU and the current head of farming at the Soil Association.
Monetisation strategy
SML intends to earn money initially through its automated invoicing and payment gateway system. The aim of our invoicing and payment system is to simplify and speed up the transfer of funds, compared to traditional method of payment by cheque and provide buyer and seller with payment security confidence.
We also intend to monetise industry data that we capture as the system grows.
We will be able to do this because:
1/. We will in time know which farmer is holding what type of stock at what stage of their life. This will enable us to target relevant advertising to them. Thus vaccinations for calves, particular feeds for animals when they are the fattening stage and so on.
2/. We will know if members are holding high-value breeding stock, where insurance may be relevant
3/. We will know if people are selling dairy herds (herd dispersal) The purchases are often financed by loans, so would we be able to sell advertising for financial services
Use of proceeds
We intend to use additional funds raised to develop:
The recruitment of a successful commercial manager who will be tasked with:
- Consolidating and developing relationships with retailers and meat processors.
- Generating revenue through the ‘Farmpay’ system.
- Selling bespoke portals to niche operators such as breed societies.
Systems development:
- The app needs further enhancements.
- Further technical and legal development for Farmpay.
- Creation of an API to communicate with 3rd party software and applications.
Profile raising and engagement:
- Further PR activity is planned such as exhibiting at livestock events linked to new product and function launches.
- Direct engagement with defined groups, such as Young Farmers and breed societies.
- Regional roadshows are also a pre-requisite of communications activity given the tradition of face-to-face engagement in the agriculture sector. They have proven to be beneficial, but are time-consuming and can be costly.
Market
Target market
In phase one of its development, SML’s target market are farmers who trade with each other. A cow can be traded up to five times during its life between farmers who specialise in rearing animals at different stages of their lives. Sheep are traded less frequently, but in greater numbers.
The traditional markets have not changed in any appreciable sense for thousands of years. But with the outbreak of disease and greater concerns over provenance, markets are closing. There are now 118 markets in the UK, down a third in the last ten years.
Livestock farmers recognise the need to modernise and improve their margins, but have not had the means to do this until now and have been reliant on travelling ever greater distances and paying high commission as supermarkets and processors squeeze margins.
Early adopters and younger generation farmers have provided nothing but highly positive feedback. The challenge for SML is to grow its market share and achieve critical mass in a wider cohort.
Our intention for phase two is to develop the business among the farmer to abattoir sector. The key proposition will be the opportunity to improve margins and create a more transparent supply chain.
In phase three, we intend to introduce Portals for specialist groups such as the Soil Association.
Our plan for phase four is to open up the ‘portal process’ to retailers. This could benefit consumers in bringing down costs on the supermarket shelves and will benefit retailers through greater openness around origin and sourcing.
SML's aspiration is to complete the above stages in around two to three years. Beyond that, we consider there to be numerous other scalability options including:
- Livestock transport and load consolidation.
- Livestock bi-products and export opportunities.
- Genetic data.
- Export opportunities.
- International franchising of the system.
Characteristics of target market
Sell My Livestock has two primary markets and two subsidiary markets;
Farmer to farmer trading (using 2013 industry figures)
- The UK’s 150,000 cattle and sheep farmers.
- Over a hundred and fifty livestock markets have closed in the last 25 years. There are less than a hundred today in England and Wales compared to 259 in 1990. Last year over 2.5 million cattle were
sold into the food chain, with a value of £2.8 billion. £1.1 billion worth of sheep also entered the food chain.
- It's not possible to get a completely accurate figures for farmer to farmer animal trades, but in the first week of August this year, £6 million worth of stock passed through British livestock markets.
Farmer to abattoir (processor)
In 2014, 2.6m cattle and 14.5m sheep and lambs were sold for slaughter.
Retailers & specialist groups
We intend to allow retailers to develop their own dedicated portals to manage their own supply chain under an SML license fee. We also intend to allow specialist groups to develop their own trading portals too, enabling livestock farmers to trade with each other and provide additional sourcing for retailers.
Marketing strategy
SML focuses on three ways of reaching its market:
- Online and through social media. It has already gathered 2,000 registered users regularly trading. It has a 15,000+ agricultural social media following - more than major industry publications.
- Traditional PR and profile raising is achieved through editorial coverage on mainstream media and through trade outlets. The launch was covered extensively on all BBC channels including BBC online as well as ITV online. The prominent trade magazine Farmers’ Weekly, which has weekly circulation of 59,000, has carried two positive editorials in the last 12 months with more to follow as SML develops.
- Face to face marketing through roadshows and livestock events such as country shows etc. This has proved highly successful. At a ‘tester event’ in Cornwall in the summer of 2014, over 90 farmers attended. Subject to achieving investment a significant presence is anticipated at shows and events in 2015.
Whether you are buying or selling, the key messages are:
- It’s simple to use
- Saves time and money
- Improves welfare and is an inevitable development from the existing system.
SML is not a ‘leave alone’ revenue generator. A help desk is manned 16 hours a day and all help requests are responded to within an hour. It is a combination of personal touch and technology business – which we believe is appropriate for the sector.
Competition strategy
SML's direct competitors are the 118 livestock markets which operate across the UK. They can charge in excess of 5% commission, with many additional charges such as admin and washing fees. Retailers and processors are vocal about raising concerns about the risk of disease. SML's aim is to tackle both of these problems. It offers commission free trading and we believe it reduces disease risk, because the animals only travel between a farm and do not mix with other animals at the live market.
We believe SML's market advantages are its ease of operation and the opportunities it offers to reduce costs for both buyers and sellers.
The key challenges ahead for the business are to achieve critical mass and grow users. It was recently described as blazing a trail’ in the online auction sector. SML currently has more than 300 stock offers with a value of over £1m on the site and growing.