Firm entry through e-commerce in the U.S. agricultural input distribution industry

US agricultural input supply chains have been chronically burdened with excess inventories and inefficient coordination. In the late 1990s, new e-commerce firms sought to streamline the chain by efficiently connecting end-users with upstream suppliers while displacing incumbent intermediaries. Despite promising conditions, e-commerce entrants have been only marginally successful in the US agricultural input markets while incumbents have remained firmly in place. In this paper, we develop a theoretical model to examine the conditions under which e-commerce firms could enter and disintermediate agricultural input markets. We then evaluate these conditions against empirical evidence for the 1998-2000 period — when most e-commerce firm entry occurred in the US-and provide an explanation for the apparent failure of many of the early entrants.