Digitalization is a very important topic not only in the chemical industry as a whole, but also in chemical distribution. As Wolfgang Falter states in his article: Customers increasingly search online and initiate digital contacts via websites, social networks, search engines and commercial platforms. Those distributors that they do not find online are no longer present in the relevant markets.
This development has led to many discussions within the chemical distribution industry on how best to address the issue of digitalization.
CHEManager asked executives and industry experts familiar with the development of e-commerce in chemical distribution to share their opinion on what needs to be done in order to survive in an increasingly competitive environment and how to deal with a possible disruption caused by new digital developments. We wanted to know:
Will e-commerce platforms in chemical distribution be more successful today than CheMatch, ChemSystems, ChemConnect et. al. were 20 years ago?
Who in the chemical supply chain from principal to distributor, logistics provider, online retailer, start-up to customer will be winners/losers in online distribution?
What do you (either alone or with partners) plan regarding online distribution?
Looking at the development of e-commerce platforms over the past two years alone, it is apparent that they will be, and already are increasingly successful. The digital world is developing at an exhilarating speed and so are digital solutions for the chemical industry. Mindsets and expectations are changing quickly, influenced by an increasing number of digital natives entering the market. This opens opportunities for outside players to infiltrate the chemical market and implement successful business models from other segments.
However, there are several aspects that prevent a comprehensive success for scattered e-commerce platforms — at least for now.
There is the complexity of compliance and regulations. The vast product range with very specific needs. E.g. technical and formulation expertise for specialty chemicals on the one hand and competitive pricing for volatile commodity products on the other. To offer both in equal quality is challenging, especially as producers need products from both ranges but are reluctant to purchase through various platforms.
There are noticeable attempts within the industry to solve the above-mentioned issues from within, segregating outside infiltrators. Ideas range from forming an online distribution alliance, to promoting the incorporation of ERP add-ons that offer direct links between parties and a market platform in one.
"Agility and Velocity
Are Key to Succeed"
Andreas Früh, CEO, TER Chemicals
So overall digitalization already provides many solutions to enable online chemical distribution and significantly affect our supply chain. This will change business models within the industry but also offer opportunities to increase efficiency and exploit new distribution channels. If played well, producers can be the big winners of this development as they have the power to steer the developments to their advantage. Distributors and logistics provider that know how to ride this wave and offer unique solutions, could however benefit just as much. In any case, agility and velocity are key to succeed.