There are many similarities between the two go-to-market strategies – both are designed to connect buyers with sellers, provide information about products, and help process transactions. Both models can cater to a broad audience or specialize in certain products or services. Both strive to bring efficiency to the process of buying and selling. So, what are the differences between the two models - especially for the chemical industry? We broke it down into four key elements:
Marketplaces Disrupt, Commerce Portals Value Relationships
Marketplaces wear the term “disrupt” as a badge of honor. Large online retailers are proud to have unsettled how products and services are bought and sold. When an online marketplace moves in, many existing players go out of business, supply chains crumble, and partnerships wither. This might not be the right approach for the chemical industry. Buying and selling chemicals is not the same as buying and selling consumer goods. Chemicals are technical products, highly complex, specified by many parameters, often hazardous, and regulated. Also, the industry has a complex value chain built on closely cultivated relationships, especially with distributors.
A digital commerce platform that is purpose-built for the chemical industry thrives on supporting and improving existing workflows and processes, providing value to all players at every step of the supply chain.
Marketplaces Act As Intermediaries; Commerce Portals Help You Do Business On Your Own Terms
Most online marketplaces serve one main purpose – to connect online buyers with products they seek, and sellers with potential customers. Marketplaces can make it easy for the customer to find products, compare prices, submit payments, and generally take the hassle out of online shopping. Sellers benefit from access to a pool of potential customers under the marketplace umbrella. Yet, they wedge themselves between suppliers and customers. Adding a layer of complexity to the value chain, increasing the risks of commoditizing the product portfolio and disconnecting customers from chemical suppliers.
Owing a branded digital commerce portal avoids these risks while also offering customers a broad choice of purchase options, enabling a modern buying experience and protecting the brand from commoditization.
Marketplaces Create Value For Some Players, Commerce Portals Focus On Complete Value Chains
Marketplaces claim to “cut out the middleman.” For many products, this is indeed a perfect way to increase efficiency; but buying industrial chemicals is not something that most companies can (or want to!) do without knowing who the buyer or seller is, or what their track record looks like in producing, handling, and delivering specialty chemicals. Customers want to know what backup services and support (e.g., technical help in using the product) they can provide. This is not a place for matching buyers and sellers anonymously or throwing a product onto the public domain. Distributors continue to play a vital role in the chemical value chain, and trust between parties is often nurtured for decades.
The chemical industry can really benefit from a solution that enables market players to digitize existing supply chains, relationships, and workflows while reaping the enormous benefits of digital technology. A solution that augments the role of distributors and creates value for all players.
Marketplaces Connect Buyers With Sellers, Commerce Portals Add Visibility From Producer To End-Customer
Chemical products are used in various industries— from agriculture to industrial manufacturing to food processing. Still, producers of raw materials often don’t have any way to trace what their products are ultimately used for. A marketplace may or may not provide producers visibility into the end-uses of their products.
On the other hand, an industry-focused commerce platform helps producers set more accurate production goals, understand market patterns, and analyze price fluctuations. It’s not just about finding a buyer – it’s about owing the data to create transparency and visibility throughout the products’ entire value chains.
The post is taken from our recently published white paper Choosing the Best Digital Commerce Platform for the Chemical Industry. Click on the link for more insights regarding digital commerce transformation in the Chemical Industry and the options suppliers and distributors can choose from.
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