The chemicals industry may be new to B2B ecommerce, but the growth of marketplaces and suppliers’ and distributors’ branded ecommerce sites are moving the industry forward online.
One fast-growing example is marketplace ChemDirect. The B2B chemicals marketplace kicked off online marketplace sales transactions in 2019 and is on course to triple gross merchandise volume to about $40 million by the end of 2023 over 2022, president Dave Haase says.
For an industry that is still new to ecommerce, several chemical marketplaces are emerging with strategies designed to set them apart and foster connections with buyers and sellers. At ChemDirect, the marketplace is taking a multi-pronged approach that in the past year has expanded its user base with such organizations as Sun Chemicals, 3C Labs, Tyson Foods, Johns Hopkins University and the University of Southern California.
To prod its growth, ChemDirect — backed by more than $10 million in funding from investors including logistics company Schneider National Inc. and the TitletownTech joint venture of Microsoft Corp. and the Green Bay Packers — last year expanded to more than 500,000 specialty chemical products and brought its number of suppliers to 130.
Operating out of Green Bay, Wisconsin, office space shared with TitletownTech across from the Packers’ famed Lambeau Field, ChemDirect also doubled its number of buyers to more than 1,000 as it improved the online customer experience with new services. Its chemical markets range from agriculture and automotive to food and healthcare.
Displaying off-contract chemical prices
To make it easier for buyers to see the base prices of the chemical products that ChemDirect makes available, the marketplace takes the unusual step of displaying those prices on its public-facing product pages — rather than the more common approach of only showing contract pricing on password-protected customer account pages.
“You’re not providing value for the person on the buy side of the transaction unless you’re giving them all the information they need to buy,” Haase says, adding, “That’s actually the purpose of a marketplace.”
Haase adds that about 80% of ChemDirect’s orders initially come through its listed prices, but that many of those customers go on to place bulk and recurring orders under contracts. “About 20% of our orders, and 70% of our rveenue, go through bulk or recurring purchases,” he says.
ChemDirect, also offers a range of payment and financing options through ChemPay, an online program offered by financial technology and services firm Balance Payments Inc. For its ecommerce technology, ChemDirect uses Adobe Inc’s Magento platform.
ChemDirect moves in new directions
In a move to serve a complementary market to chemical suppliers and buyers, it launched the ChemExchange portal for selling overstocked inventory.
ChemDirect’s growth strategy also extends to order fulfillment and logistics, addressing the challenge chemicals buyers face in hiring carriers and shipping chemicals expeditiously and according to transportation and safety regulations. ChemDirect launched with Schneider last year a chemicals shipping network that assists companies with lining up carriers certified and capable of carrying chemical loads.
Schneider is building out a network of carriers that handle chemical transport, and ChemDirect is developing technology designed to let ChemDirect users to plan their shipments. Haase says the freight service, combined with the online purchasing experience, is designed to significantly reduce the amount of time it takes to procure chemicals and arrange for shipping – from weeks to an instant transaction.
“We want to bring that into a real-time experience, very similar to what you would see as a consumer when you shop online,” Haase says.
Skip Laubach, president and chief operating officer of chemicals supplier Vertec BioSolvents, a supplier of non-petroleum-based industrial solvents, says that ChemDirect’s overall marketplace strategy is helping it to expand Vertec’s business.
“ChemDirect enables us to reach customers like never before and at no additional cost,” he says in a ChemDirect press release. “We’re also saving time and administrative costs on customer service, coordination and shipping.”
Speaking at EnvisionB2B 2023
Haase will speak on a panel about marketplace strategy at the EnvisionB2B 2023 Conference & Exhibition in June in Chicago.
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