eCommerce for Chemical Distributors: The Time is Now
The overall digitization transformation in the chemical industry demonstrates the capacity to move beyond the current growth and productivity levels and deliver value in terms of innovation, increased reliability and efficiency. However, perceived negatives, fear of more competition, lower market share, potential job losses and the possibility of lower prices and margins have made chemical distributors skeptical in one key area for growth: eCommerce.
An article published in the 2018 Q1 edition of the ICIS Chemical Distributor notes that many believed shared third-party platforms posed little threat because they were unable to compete in terms of logistics, regulation and compliance, and technology. However, Amazon’s emergence on the chemical scene has changed those perceptions.
Is Amazon a Threat?
Chemical distributors now worry that companies like Amazon are going to cut into their market share. But Will Crimmins, sales manager at Brainerd Chemical argues that online retailers will only be a threat if the chemical industry does not adopt their own platforms that provide data to customers and online ordering, since today’s buyers want access to information in a quick and efficient manner.
While Amazon may not be directly affecting chemical distributors right now, it should not be eliminated as a future threat. In fact, Amazon can make significant advancement with products like paints, varnishes and additives, flavors, fragrances, reagents or surfactants, thereby disrupting important segments of the chemical industry value chain.
Change is Key for Chemical Distributors
The key is for chemical distributors to change the way they do things. In doing this, embracing digital technologies such as Sage Business Cloud Enterprise Management (Sage X3 ERP) can also be a game changer. As a matter of fact, chemical companies that hold onto traditional selling methods may find it hard to compete in the internet economy. Many customers are now demanding electronic transaction capabilities.
Chemical distributors have an edge over online retailers in that they have nurtured relationships with their clients, better capacity utilization, lower inventories, and lower earnings volatility. If done right, distributors can leverage their foothold in the market to find success with a strategic eCommerce platform.
eCommerce can help reduce costs, improve efficiency, provide access to new markets and a larger customer base. If structured and implemented correctly companies can differentiate their offerings, increase customer satisfaction and compete more effectively.
For a closer look at eCommerce in the Chemical market, watch this video: Winning in The Chemical Marketplace: Integrating eCommerce & Chemical ERP