How Do Chemical Suppliers Choose the Right Business Model?

Many B2B buyers prefer to buy products using digital channels. The choice of the correct operation mode is very important for the customers in the chemical industry scattered market. Chemical Suppliers…

Digitization – especially digital marketing – is an increasingly important topic for chemicals. In the past year alone, several new online markets (or “digital platforms”) have emerged, creating new opportunities for industry participants to reach millions of customers.

The novel coronavirus pneumonia epidemic has further strengthened the digital platform and increased the remote working mode. Therefore, many chemicalsuppliers are trying to interact with customers online.

Those who want to enter the digital platform game may encounter opportunities and risks. For example, highly customized products and a consolidated customer base mean that the increase in digital marketing does not necessarily lead to an increase in sales, and standard products are usually the most suitable platform for multiple suppliers.

In any case, chemical suppliers who are transforming to digital platforms can quickly act and update their operating model based on some common success factors to win the game. In fact, our research shows that taking the right action can increase interest, tax, depreciation and amortisation absolute income (EBITDA) by 3% or more.

Digital platform in chemical industry: Introduction

B2B buyers are increasingly willing to use digital platforms to buy products. A recent McKinsey survey of the European chemical industry shows that 55 percent of petrochemical buyers are willing to use digital channels if there is an efficient and value-added platform. For specialty chemicals, this is even higher, with 82 percent of customers willing to use digital platforms.

Chemical dealers have started using these platforms and hope to develop into the “Amazon of chemicals.”

How Do Chemical Suppliers Choose the Right Business Model?

Although these distributor platforms are currently unable to provide recipe development services, they can provide full product portfolio from a wide range of chemical suppliers, as well as product specifications and applicability details.

The distributor platform can also provide additional services that are difficult to provide by small open platforms, such as repacking.

See Also- Technology Blog Posts

Finally, new players are threatening existing players. Whether it’s digital superstars like Amazon and Alibaba, or startups like molbase, know or farmers business network, new players are creating digital platforms and building direct customer relationships.

Despite the actions taken by existing enterprises in the chemical industry, the increase in cost pressure (because the cost of new entrants is lower than that of existing enterprises) and the promotion of high-quality customer experience will form competition in the next few years.