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Nutrien ag solutions products8/15/2023 I read a book recently that highlighted the opportunities in becoming a digital first versus analog first business called Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World and the take aways jive with where the opportunities are for Nutrien or other business in agriculture. Nutrien has begun to move that direction. But the opportunity is in becoming a digitally savvy organization, with that focus reverberating throughout the business, prioritizing digital data collection more and more. The same can be said for all agribusiness input manufacturers and retailers. Nutrien however is still an analog first business. This to me is part of where the opportunity for Nutrien lies: they have the scale, they have the staff, they have made the investments and they have the services to support these digital initiatives, a digital focus actually gives them the upper hand in their foot print to leverage this! If this is a one time log in to approve a crop plan from their agronomist that is beneficial to Nutrien, but it has less value to them than constant log ins and utilization. If the farmers are using it more frequently Nutrien gets a tighter feedback loop and can improve the system, better understand product demand, interest etc. This helps to show how engaged the users are and even can show why if understanding their clicks. How many customers log in once per month? In the tech world an L7 (last 7 days use) or L28 (used in last 28 days) metric are common to look at in totality and from a cohort perspective. What their metric lacks is an understanding of true platform utilization. One could argue it doesn’t matter, but it actually does in terms of what sort of data they are collecting and the habits they are forming with their customers. They emphasize the churn reduction and the increased number of segments purchased by these customers, but without knowing the specifics of how that number is calculated, the number has less relevance as they could simply be their agronomists engaging with their current best customers to do digital initiatives. Is it a farmer that looks at one product online and then their entire annual purchase counts towards that total? Is it an amount entered by their sales person online and confirmed by the farmer logging into the portal? There is no tangible description surrounding it. The $1.2B on the online platform continues to draw questions from readers of Upstream when I touch on it. Could be due to the pandemic, but also in thanks to a focus in North America for them. $1.2B of digital platform sales smashed their 2020 target of $500 million. Note: This is adjusted to be annualized so their acquisitions put the number higher than $1 million. Nutrien has started to grow their sales elsewhere around the globe This will be helpful from an annual cashflow perspective (Australia and Brazil purchasing inputs at varying times to the Northern Hemisphere), but also a risk mitigation perspective in case of challenges in the USA: This is interesting as we see it obviously become more meaningful and a larger driver of their business. They started showing their financial revenue as well in 2020. Their seed number has been small for a while, but brings to light the dominance of players like Pioneer Hi-Bred in the USA. Margins are obviously much higher on their services, which are the foundation of selling MORE of their core products. Their breakout on margin is (rounded for ease of reading):Ģ8% from financial, merchandise, and services. The remaining 15% came from Nutrien Financial, Merchandise and Services. 35% of their retail revenue was crop nutrients
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