Part 1: The Rise of the New Chemical Marketplace

September 13, 2018 Simon Hardy

Back in 2001, when I first started working in eBusiness in the chemical industry, the focus of most businesses was to transform the way we do business from “bricks” to “clicks.” At that point several companies were created to support the various initiatives: cc-Chemplorer, Elemica, Omnexus, Rubber Network, Quadrem, Covisinit, Ariba and so on. Some of these were considered marketplaces, but most supported an order-to-cash, or procure-to-pay process. The companies that were marketplaces struggled more than the execution hubs, so they changed business models. What we saw was the right idea, but maybe at the wrong time.

What is interesting is that now might be the right time for a marketplace. I am seeing a lot of movement, but who will win is still a big unknown.

Chemical companies have been watching the trends and have been looking at Digital Transformation as an extension to the Industry 4.0 work they have going on. There is a drive to put the customer back into the center of the transaction. To meet the changing business dynamics, marketplaces like Chemondis, OneTwoChem, GoBuyChem are popping up.

Chemical Companies are seeing growth from using marketplaces. If you talk to any company (and I have probably sat in front of over 30 chemical companies in the last 12 months) they all know that they will have to address Alibaba’s dominance in the market and therefore, many are selling their products through that platform. Some of them, particularly in more generic markets, closer to retail, are also seeing their products marketed on Amazon.

In the near future, the outlook for marketplaces seems positive.  The Chemical Industry is huge according to the Review from ICIS Chemical Business, September 2017. The top 120 companies have recorded revenues of approx. $1,087 billion. A report authored by from the 14th October 2015 called Global chemicals market to grow to $5.1 trillion by 2020 (see associated diagram). The main theme of the article was that NAFTA and Europe have solid growth, but China would drive the significant uplift. Seeing the economies in 2018 may change the feeling slightly, but China is still a major global industry.

There is the money to be gained from buyers of chemicals and a percentage of these revenues will go to a marketplace, as this is their preferred way of buying. How does this change the future landscape and who will be the major players in this marketplace game? Look out for my next blog to tackle these questions…

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