Chemical companies are channeling Amazon

April 5, 2021
With digital storefronts and online marketplaces, chemical companies can capitalize on their customers’ growing preference for Amazon-like online purchasing experiences.

When specialty organic chemicals manufacturer Tokyo Chemical Industry (TCI) launched a new global digital storefront this past August to replace an outdated e-commerce platform, it did so with the customer experience front of mind.

Built to support customers in 20 countries with multiple languages and currencies, the new TCI storefront is designed to deliver a seamless purchasing experience, with extensive, highly customized search and sorting capabilities that cater to the complex, often highly nuanced needs of customers.

“TCI knows an end-to-end digital customer journey is essential in today’s experience economy,” said Jonathan Brassington, head of digital customer experience at Capgemini, which helped the company develop the site on the SAP Commerce Cloud platform. The new digital storefront, he adds, “is already delivering value at scale for TCI.” 

Creating value at scale is precisely the reason that chemical companies like TCI are beefing up their e-commerce capabilities. Not only can digital storefronts and online marketplaces enhance the customer experience by providing the seamless information-gathering and purchasing journeys that customers now expect from their B2B2C interactions, they also provide a platform from which a chemical company can deepen relationships with customers, tap new markets, develop and differentiate new services and revenue streams, and lower the cost of sales. And, in a business that includes tens of thousands of suppliers and distributors competing for market share, companies are realizing that providing a top-shelf digital experience can put them on equal competitive footing with much larger enterprises.

Digital commerce and the customer experience are once again hot topics in the chemicals business, some two decades after a first wave of online third-party chemicals marketplaces largely fizzled. But with a stronger set of digital capabilities and a better idea of how to apply them to the e-commerce experience, the chemicals industry is once again embracing online storefronts and marketplaces, likely having realized, as a trio of consultants from Deloitte posited in a recent article, that its collective future may well depend on “providing better customer experiences,” starting with “a seamless e-commerce experience that enables customers to complete their entire transaction online.”

Digital portals and marketplaces, they suggest, are the logical delivery points for those elevated experiences. But exactly what shape should a storefront or marketplace take, and what will the customer experiences it provides look and feel like? We’re here to help chemical companies answer those questions by taking a closer look at the digital e-commerce pathways that are opening to them:

1. Build your own brand-specific digital storefront. It’s important that a storefront deliver the kind of experience that today’s B2B2C customers expect: resource-rich, transparent, convenient, secure and versatile, with real-time pricing and visibility into inventory, sample management capabilities, order and contract management capabilities and invoicing. It should also offer customers insight into country- and market-specific compliance requirements, product specs, data sheets and documentation.

Linking the digital storefront to other value chain partners (logistics, etc.) further enriches and extends the customer journey from pricing to order placement through to shipment. Once users gain trust in the quality, convenience and security of the buying experience, they’re likely to return for more.

The institutional and market knowledge held by your sales and service teams also can become a customer resource in the online environment. Enabling customers to access expert advice and consulting services from those in-house experts via the e-commerce portal (augmenting their automated interactions with machine learning-driven chatbots) at certain critical moments in the digital purchasing journey adds a valuable dimension to the buying experience — a dimension that other, more transactional online marketplaces likely won’t be able to match. 

There’s also opportunity for a company to bring outcome-based services to the digital storefront, where a chemical product is packaged with logistics, technical services, compliance assistance, etc. These types of bundles provide another point of competitive differentiation, as well as a potential new revenue stream for the company, while also helping to deepen relationships with customers. The chemicals company becomes a trusted solutions provider, not just a commodity seller.

2. Stand up your own digital storefront using a third-party solution. TCI took this approach with its new storefront. It’s built on a completely digital and fully integrated front-to-back office architecture, so it can smoothly align pricing and tax information on the fly, enable different site features that vary by country, and replicate offline orders for full visibility.

Using a SaaS digital storefront solution such as those offered by Asellion, Mirakl, Impratech and SAP, specifically for chemicals, a company can quickly stand up a digital storefront, and do so as an operating expense rather than as a capital investment. The goal is to create a state-of-the-art digital purchasing journey for customers, while reducing the cost of sale and freeing your sales and service employees to focus on high-value pursuits like relationship-building and supporting key customers.

Look for a third-party solution with robust yet simple navigability, real-time interactivity and functionality, so users can readily access the information, services and products they seek. Bottom line: The digital storefront should make it easier for customers to do business with you. The third-party platform also should be able to readily accommodate integrations with your ERP, CRM and CX systems, processes and value chain partners, and to grow along with you as you build out a digital business ecosystem. It must be secure, foster business trust among partners and protect customers from concerns such as collusion. It also should come equipped with digital tools that monitor, collect and analyze data about every facet of the customer journey, or as Deloitte puts it, “deep analytics about purchases, customers, and markets, to create better customer experiences and thus more value.”

3. Participate in a broader multivendor marketplace. Having a brand-specific digital storefront shouldn’t preclude a company from also carving out a presence within broader, multi-vendor marketplaces, alongside competitors as well as complementary service providers. Customers that might not otherwise gravitate to your brand-specific digital storefront could well find your company in an emerging marketplace like CheMondis or Knowde. These trading platforms can open doors to new customers (at a very low cost) as well as new business partners across the value chain. Knowde, for example, touts having more than 2,000 suppliers and 100,000 products across 800 storefronts, with the ability to “search the world’s largest collection of chemicals, ingredients and formulations,” and to “filter by chemistry, application, function, properties and more to find the right product, quickly” by browsing catalogs, accessing documents and downloading starter formulations.

A new generation of digital chemical e-commerce ventures is indeed emerging. Chemical sales on US B2B e-commerce websites grew at a 3.7% compound annual growth rate from 2017 to 2020, according to Deloitte. Even the behemoth online marketplace Alibaba now has a chemicals “showroom” that lists more than 400,000 products. If one of the world’s largest e-commerce platforms sees promise in digital chemical sales, what does that say about where the chemical business is heading?

Mark Carlson is a member of the global industry business unit for chemicals at SAP, where he has spent more than 20 years focusing on solution engineering, industry and value engineering, and most recently, the customer experience in the chemical industry. Prior to joining SAP, Carlson spent more than a decade working in the manufacturing and operations sides of the chemicals business. He has a degree in chemical engineering from Iowa State University and an MBA in management & marketing from Dallas Baptist University.

David Dunn has a degree in chemical engineering and has spent his 35-year career in and around the chemical industry. He has held numerous positions in the industry and developed a strong background in manufacturing, operations and product development. He joined SAP in 2007 as an Industry Principal for Chemicals and currently is the SAP Global Industry Marketing Lead for Chemicals.