Internet sales expand marketing opportunities
The fishing sector is a field steeped in tradition that values personal connections, where a simple handshake holds significance. Numerous players in this sector struggle to embrace digital trading platforms, which, despite their benefits, can feel impersonal. However, it seems that this mind-set is shifting: Online portals, App Stores, and e-commerce platforms are now playing a more prominent role in the fish trade.
The hustle begins very early, at 5 a.m. and often before sunrise. Everyone involved knows their tasks. The fish is ready, is inspected and, when the auctioneer begins his chant, the auction floor heaves with a combination of adrenaline and testosterone. Just a little later there is peace again. The boxes of freshly caught product have been sold and are on their way to processing plants, wholesalers, restaurants, and supermarkets. It’s been like this for decades. The fish business works in line with well-established rules and is still predominantly “offline”. Besides phone calls, emails, or the occasional WhatsApp message, the processes have barely altered. The people involved usually know each other and are part of regional networks. Despite all this functioning smoothly, the fish and seafood industry at this level remains a risky professional gamble. There are numerous product varieties available in different sizes and qualities. Those who purchase perishable goods that depreciate in value with each passing hour at fluctuating prices without secure purchase agreements and anticipate being able to resell them quickly and profitably may face significant challenges. The European fish market, with an annual trading value surpassing 140 billion euros, consists of a network of 140,000 businesses. Each of these businesses possesses distinct preferences, specific quantity requirements, and varying price ranges.
Throughout the supply chain from catch to plate, a fish typically changes hands on average around seven times. The clock is ticking! Time is of the essence as the fish should ideally reach the customer within three days latest. Operating under this constant pressure is really no fun and that is why an increasing number of companies in the traditionally ‘ultra-conservative’ fishing industry are embracing digitalization to streamline their routines and processes. This could definitely be seen as a revolution, especially considering the fact that while the acceptance of digital innovations is increasing in almost all areas of the economy, there has been little movement in the fish trade for a long time. Nevertheless, it is crucial to rethink our approach now. To stay relevant in the future, it is essential to keep up with the on-going global developments. Although we are still in the early stages, there is already a noticeable inclination in many parts of the world to rely on data-driven trading platforms for even fundamental business processes like purchasing and selling goods. Business-to-business portals (B2B) that directly connect buyers and sellers are particularly impressive, often showcasing above-average growth rates.
This is by no means a passing trend. Business-to-business marketplaces are likely to become permanent fixtures due to the compelling benefits they offer. Apart from the wide variety of fish and seafood available, this also encompasses the monitoring of crucial production and trade information, as well as price fluctuations in the retail sector. Through big data platforms, these vast amounts of data can be analysed in real-time, facilitating the identification of significant trends, strategic decision-making, and risk management. Seasoned fish traders who have traditionally relied on their intuition may understandably find it difficult to entrust their business to rational algorithms that do not consider established relationships and personal connections.
Digitalization is happening slowly but surely
However, digitalization has already made significant progress and gained momentum in certain sectors of the fishing industry. This particularly applies to the monitoring and control of aquaculture and fisheries, as well as the utilisation of artificial intelligence (AI) and the Internet of Things (IoT). In the realm of aquaculture, data analysis platforms have proven instrumental in optimizing production, overseeing fish growth and health, minimizing labour requirements, and reducing production costs. For instance, e-fishery’s Smart Feeder, an automated feeding system, collects crucial data on fish growth and adjusts feeding patterns accordingly. XpertSea platform uses image recognition systems to detect shrimp growth rates and assess their health. AquaByte utilizes AI technology to monitor the infestation and growth of sea lice in salmon populations. Conversely, Aquacloud operates as a platform that harnesses high-resolution sensors from the IoT to gather vast amounts of data, which is then transmitted to other devices within closed networks. This comprehensive data collection and analysis can prove invaluable in assessing the magnitude and severity of a sea lice infestation, enabling prompt implementation of necessary control measures if required.
Remote-controlled vehicles, such as aerial or submersible drones, enable inspections to be conducted without the need for individuals to be physically present on site. Within the aquaculture industry, ROVs such as the Deep Trekker underwater drone are used to manage net enclosures and their anchors at depths reaching up to 100 meters. Additionally, the Aquascape mapping tool platform assists shrimp farmers in overseeing the water quality and detecting potential disease outbreaks in their shrimp ponds.
Digital platforms play a crucial role in the fisheries sector, primarily focusing on monitoring and optimizing sustainable fishing practices and predicting oceanographic conditions. Platforms like SkyTruth and SnapIT utilize a range of technologies, including satellite data, artificial intelligence, and cloud systems, to monitor ship activities at sea. The foundation of these platforms lies in automatic identification systems (AIS) and transceiver positioning systems, which are now installed on more than 200,000 ships worldwide, providing valuable information about their whereabouts. One significant area where these platforms are instrumental is in combating illegal, unregulated, and unreported fishing (IUU). The integration of modern electronic technologies, such as GPS monitoring and video feeds, has made it increasingly challenging for illicit fishermen to conduct their operations. In some instances, ship tracking technologies and data collection platforms are even being incorporated into supply chains. This is made possible by the accurate tracking capabilities of fishing authorities, who can monitor the locations, routes, and speeds of vessels at sea. When combined with electronic catch documentation that reveals the quantity and species of fish caught, these platforms create optimal conditions for complete traceability. Furthermore, advanced image recognition systems like FishFace, powered by artificial intelligence, have proven to be remarkably effective. They can identify individual fish species, as well as determine their size and quality. Similarly, TunaScope and GoMicro are powerful tools that classify tuna based on various quality criteria.
B2B platforms revolutionizing the purchasing of fish
Digitalization has made significant advancements in various aspects of aquaculture, fishing, and fish processing, and its acceptance is steadily growing. However, when it comes to B2B trading, there is still a considerable amount of scepticism and reservations. This hesitation can be attributed to the emotional factors involved, as from a purely rational standpoint, digital platforms offer numerous advantages. Business-to-business portals in the digital realm connect buyers and sellers from all around the world, enabling transactions at any time of the day or night. Unlike traditional fish shops, these digital platforms eliminate the need for physical meetings at specific times and locations. Previously inaccessible markets are now open, thanks to the virtual space of global online trading. This opens up unexpected opportunities to discover new products. Furthermore, direct communication between suppliers and buyers allows for the delivery of fresh, frozen, or processed products directly to their final destination, bypassing costly intermediate steps. This not only saves money but also ensures that the desired goods reach the customer faster and in better quality, without the need for intermediate storage. The use of the internet for commercial transactions also enhances transparency and simplifies the documentation requirements for traceability.
However, not everyone is convinced by these arguments. The B2B seafood sector has faced significant challenges with almost all commercial digital projects initially struggling or failing. According to estimates from the Russian digital online marketplace Yorso, a few years ago, less than 0.7 per cent of fish sales were conducted online through business-to-business platforms. Although the market share of digital trading platforms is expected to be much higher now due to strong growth, the reluctance of buyers and sellers is still evident. This reluctance stems not only from mistrust, traditions, and conservatism within the seafood industry, but also from the diverse and confusing nature of the supply side. Each digital marketplace operates on a different model, with some charging trading commissions, others requiring service fees, and some even requiring registration as a platform member beforehand. Additionally, buyers and sellers often need to provide proof of authorization to trade seafood and demonstrate their creditworthiness. Credit and product insurance may also be necessary. The easiest transactions usually occur on platforms that offer not only products but also suitable financing options, secure payment systems, logistics services, and assistance with customs formalities and official certificates. Essentially, these platforms provide a double benefit to users. Some platforms keep the identities of the parties involved ‘secret’ during the initial stages of a transaction, only revealing their data once the deal is signed and confirmed. Others operate with transparency from the beginning, allowing participants to rely on their good reputation. E-commerce platforms and online marketing not only enhance visibility but also increase brand awareness.
Trust between trading partners is essential
B2B online trading requires a fair amount of trust from both buyers and sellers because such transactions are always accompanied by many questions. Does the quality of the goods correspond to the promises? How and where can I complain about defects? Who is liable for delivery failures and when will I get my money back? And above all: What does it really cost when the often hidden fees for service, packaging, and transport are added? If these fundamental aspects are not clear or are misrepresented, achieving success becomes challenging. Buyers seek clarity and transparency in their transactions, and the presence of unrelated services like blogs or videos on online platforms does not alleviate these concerns. It doesn’t help much when online platforms try to spice up their range of services with additional offers such as blogs, cooking tips, or videos. E-commerce platforms serve as marketing tools to attract a wider customer base and boost sales through product promotions. Many traditional retailers have embraced online trading platforms to reach more customers, a strategy that has proven beneficial during the pandemic. However, conducting business online comes with risks, especially in the digital era and the influence of social media: Negative reviews can swiftly tarnish a company’s reputation.
However, the decisive key factor for the success of any online sales is and remains trust. The operators of the digital B2B platforms that dominate this business worldwide and whose sales grow from year to year have particularly understood this. The international market leaders in online business include platforms such as eWorldTrade, SeaFoodDemand, Seafood Xchange, Made-In-China, G-Fresh, Procsea, Meatex.Co, HKDTC, DHGate and Alibaba. Platforms like Alibaba have millions of items listed on their website, fish being one of many. Most have specialized exclusively in seafood and offer a variety of fish and seafood products that are difficult to manage. These platforms vary in terms of specialization, product offerings, transparency of data, minimum order quantities, provider disclosure, and price negotiability.
E-Commerce for the end-customer with mixed results
In certain markets, B2B platforms for fish and seafood are facing challenges, while in others they are gradually gaining traction. At first glance, the situation in the direct-to-consumer sector seems to be quite similar. In this case, providers are also attempting to reach potential buyers through e-commerce offerings on the internet. However, the target audience here is not professional buyers like processors or dealers, but rather the end consumers themselves. Instead of purchasing fish and seafood products from supermarkets or speciality retailers, they can now have them conveniently and timely delivered to their homes. The conditions for this shift are favourable due to the increasing significance of the internet as a consumer sales platform. Who would have anticipated years ago that it would become commonplace to order clothing, shoes, books, or even book a vacation online? The willingness of customers to have their desires fulfilled by business-to-consumer providers (B2C) such as Amazon, Alibaba, eBay, Airbnb, Uber, Menulog, Wotif, or Expedia is substantial and continuously expanding. Therefore, it is logical to consider purchasing fish and seafood in the same manner.
Despite the favourable conditions, the number of B2C platforms that have successfully established themselves in this complex market area remains quite limited. In Europe, notable examples include HavFriskFisk (Denmark, now defunct), Kivikala (Estonia), Fisch vom Kutter (Germany), and La Pescadería de mi Barrio (Spain). While start-ups continue to explore this business model, many of them face failure. This can be attributed to the stringent requirements for traceability, secure financial transactions, and data protection. Often, these bureaucratic hurdles are underestimated. Additionally, the intricate logistics involved pose a significant challenge. Delivering fresh and highly perishable foods like fish and seafood directly to the customer’s doorstep is akin to the advanced level of mail-order business. If the customer is not available during the delivery, the fish, and consequently the business, may be compromised. Returns, which are common for items like jackets or trousers that don’t fit or meet the buyer’s preferences, are practically irrelevant when it comes to fresh fish. Even experienced platforms like Amazon, which introduced AmazonFresh in 2007, have encountered difficulties in this regard. Consequently, many providers now limit their services to specific and well-defined areas, preferably in large cities. In Australia, for instance, online orders outside the designated core regions are only delivered to airports equipped with secure storage facilities for chilled or frozen food. Customers are then required to collect their orders from these locations themselves.
Future prospects are promising
In comparison to frozen goods, the B2C business with fresh fish still poses significant challenges and requires a considerable amount of time. However, when it comes to delivering frozen smoked salmon sides or tuna fillets to customers’ homes, it has become almost routine for some. Despite the difficulties, online platforms and eCommerce continue to be appealing in the fish and seafood trade and are expected to grow further. Not only trading platforms, but also numerous processing companies are now venturing into this market to bypass intermediaries and directly reach end customers. Internet marketing provides a valuable opportunity for small craft businesses, especially those catering to niche markets and previously limited to regional operations, to gain widespread recognition and sell their products. When storage shelves are unavailable, this option often becomes the only viable choice.
The seafood online platform business model is still in its early stages. It began with platforms like Syunzai Circulation System Service (Japan, 2009), Yorso (Russia, 2014), Gfresh (China, 2015), InterFishMarket (Switzerland, 2016), ProcSea (Europe, 2016), and TunaSolutions (Australia, 2017). These were soon followed by other providers such as ShoreTrade (Australia), Seafood Souq (United Arab Emirates), Marine Fish Trade (Norway), and Seafoodportal (Norway). It is likely that more companies will join the market in the future. The long-term success and market position of these platforms is difficult to predict. However, it is evident that such sales models have a promising future.
Manfred Klinkhardt