Growing competition and rising demand have pressured all chemical manufacturers to adopt the latest technologies and transform their structures and operations. These transformations encourage the formulation of new business models that could bring chemical companies closer to their suppliers, direct customers, and even their end consumers.
In the past, we have seen most chemical distribution companies and manufacturers fall short in developing e-commerce capabilities. However, the situation has changed today, with many companies devising concrete plans to strengthen their online presence and incorporate pricing tools for successful top-line and bottom-line growth. Between 2017 and 2020, the United States chemical industry saw a compound annual growth rate of 3.7% in B2B sales on company websites and other third-party marketplaces.
A survey by Deloitte, targeting chemicals end customers, discovered the following:
Moreover, McKinsey’s recent research shows that 85% of customers prefer digital channels for repeat orders, and over 65% of chemical buyers prefer to learn about the supplier’s products via online channels. Therefore, a digital storefront has become more than just a convenience. The choice lies between using a pre-existing digital marketplace and building a branded e-commerce portal.
Branded e-commerce portal
A trademark platform presents customers with the opportunity to view products, learn about the manufacturer, and request pricing information for decision-making. From there, the platform tracks orders and documents using a customized dashboard for each customer as well as the sales team. The chemical company has access to the entire customer lifecycle and complete control over the customer experience. A branded portal also provides the flexibility to experiment with marketing and sales techniques to increase the customer base.
An e-commerce marketplace, on the other hand, operates like an outdoor market where multiple vendors compete for the same set of customers. Depending on their needs or the brand’s marketing, buyers may be attracted to one chemical supplier or the other. An online marketplace is effective for nascent companies having no established sales channels to provide awareness to potential customers.
Importance of real-time pricing
Real-time pricing, supplemented by self-service intelligent automated negotiation, plays a vital role in the digital customer experience. Buyers have a plethora of options online and expect accuracy and immediacy in quotes, or they quickly move on to the competition.
Chemical manufacturers can address complex pricing issues by adopting an omnichannel pricing strategy. In the current environment characterized by rapid change, growing cost inputs, and heightened customer expectations, resorting to data science-driven pricing tools is a wise move. According to benchmark data, an average B2B company loses up to 6.8% of profit every year due to misaligned market pricing and 6.6% due to inconsistent pricing. These trends can be reversed by price management and optimization software that determines the optimal price for every circumstance and automatically updates and delivers prices in real-time.
Furthermore, for the success of digital business models and e-commerce platforms, ensuring overall operational efficiency is crucial. From supply chain to logistics, chemical distribution companies must improve all operations in terms of speed and efficiency. Understanding the needs of buyers and suppliers to enhance the customer experience is essential. Chemberry, a division of specialty chemical company Clariant, has to that effect built a search and recommendation engine capable of guiding customers to suitable chemicals.
E-commerce for chemical supply companies is a distinct industry due to safety concerns and regulations. However, in the post-COVID world, it presents an opportunity for distributors to improve, reinvent and add value. Online distribution fosters clarity and openness and can lead to success in the long run. In addition, end customers stand to gain with premium quality products and services.