For StaplCotn, Internet simplifies
cotton selling
Electronic records reduce paper trail

By RICHARD COTTON
DBJ Contributing Writer

For as cool, comfortable and carefree as it is, cotton has been a hot and serious commodity for centuries. Marketing of the lint has been in a state of constant change since the first American bale was hauled out of the field in a wagon.

The Internet has even provided its share of innovations, improvements and, well, just plain old changes.

StaplCotn, the nation’s largest cotton cooperative has backed and, in many instances, spearheaded the industry’s embracing electronic technology. The Greenwood-based firm employs 250 people in many of the cotton-producing Southeastern states.

The cooperative maintains two significant Internet operations – besides the standard website at www.staplcotn.com. Staplcotn’s vice president of systems and controls, Larry Gnemi, said any of the 10,292 growers and share-rent landlords (landowners paid a percentage of the crop) in the group who has a computer and Internet access can check details of their bales at anytime.

“Before the Internet, we had Bulletin Board,” Gnemi recalled, “where they could dial in and get the information over the phone.”

That was all well and good but, with the handling of about 4 million bales today, the Bulletin Board was becoming a cumbersome system. Instituting its own Internet servers solved that. Another bookkeeping solution came in the form of receipts being recorded electronically; Gnemi said Staplcotn became part owner (a methodology that has become standard for the cooperative) of EWR Inc. That firm specializes in electronic warehouse receipts; it replaced the old paper trail system of tracking bales. What had been done with stacks of paper and boxes of punch cards became data in computers, instantly accessible. “It cut our staff,” said Gnemi, who is no fair-weather fan of the process. “The biggest thing in the history of cotton is the electronic warehouse receipt.” Well, Gnemi’s colleague and Staplcotn’s director of Internet sales, Hank Reichle, holds a pretty high opinion of his little technological corner of the cotton marketing business. Reichle was formerly employed at The Seam, a Memphis-based electronic cotton exchange founded in 1995 by three cotton merchants and a cooperative. His new employer, Reichle explained, became an investor in The Seam “early on, when Staplcotn saw the value” of the new marketing tool. “The Seam allows us to put cotton out in one central location for everyone to see,” said Reichle. The spot-trading vehicle has opened markets for Staplcotn members that might otherwise have been missed. Much of Staplcotn’s Internet sales through The Seam have been of smaller quantities of cotton, opportunities that might have fallen under the radar, so to speak: “We can sell smaller quantities to a larger group of customers,” Reichle said.

Reichle said it is entirely conceivable that a single bale of cotton offered up for sale on any given day will be seen on The Seam by 90 percent of the nation’s cotton merchants, of which 70 are subscribers to the Internet marketing service. While he concedes Internet sales volumes remain about the same as when he arrived at Staplcotn, Reichle says producers have realized better prices on their cotton. He says the larger market of buyers looking at the available bales offers opportunity to receive the higher sale prices; the buyer is guaranteed the product is in stock, of the desired quality and deliverable. Again, as with Gnemi’s facet of Staplcotn, Reichle points out that electronic sales of cotton through The Seam’s Internet conduit reduces manpower needs and mountains of paperwork. He even cites the environmental factor of using less paper as a positive spin-off from Internet marketing. But, while the Internet is a handy tool and “decreases the workload on our staff,” Reichle said it’s not the sole marketing tool at Staplcotn. “The Seam,” he said, “will never be a place where we do all our sales.” DBJ