Chemical buyers can find it difficult to gather up-to-date and relevant information about their industry. Which suppliers offer the lowest prices? What are the precautions to be taken if you are sourcing raw materials from overseas sellers in China? Will spot prices for a certain chemical fall in the near future?
Although large companies can deploy the resources and manpower that are required to get answers to these types of questions, smaller firms do not have the deep pockets which their bigger competitors have. Consequently, firms with limited budgets find it difficult to gather accurate data that could help them make the most of new market opportunities.
Price information is hard to come by
Chemical consumers with bulk requirements often enter into long-term arrangements with suppliers. These deals are made after holding protracted negotiations and are closed at rock-bottom prices. The terms are highly confidential as it is in the interest of both the buyer and the seller to keep the information secret.
There is also a dearth of price information in the public domain. Small and medium-sized firms are at a disadvantage as their purchase requirements are relatively low and sellers are reluctant to offer them favorable terms.
Small firms also suffer from another disadvantage. As they do not have sufficient access to information on developments in the industry, they are often caught unprepared when there is a sudden price rise or a shortage of a particular raw material. Larger firms are better equipped to handle such developments.
Surveys are expensive to commission
One way that chemical companies gather market intelligence is by retaining specialized consultants to collect data relevant to their business. These agencies can often provide extremely valuable insights and the custom-made reports they make can give the firm that commissioned the study a massive competitive advantage.
Large chemical buyers can get advance knowledge about regulatory changes or the possibility of supply chain disruptions. The intelligence that consultants provide can be invaluable in helping companies in various ways:
Ø Preparing for geopolitical developments that may impact a firm’s business.
Ø Optimizing product portfolios and identifying changes in end-user demand.
Ø Seizing the opportunities thrown up by developments in the market.
Unfortunately, small buyers simply cannot afford the services of these agencies. As a result, they suffer from a lack of information that can often lead to disruptions in their procurement processes.
Many traditional methods of gathering market intelligence are hard to use in the chemical industry
There are a handful of very large chemical companies and a much greater number of smaller players. While larger organizations deal directly with raw material suppliers, the smaller firms usually make their purchases from distributors.
Due to this market structure, gathering price or other information becomes difficult for small firms. In many instances, these small firms have no option other than to purchase their raw material requirements from the distributor who they have been traditionally dealing with.
How online platforms can help
B2B platforms offer chemical companies an opportunity to gather market intelligence that can be both reliable and timely. An online marketplace can list dozens of suppliers for a specific raw material. These sellers may be located locally or in other countries.
Price information is readily available on the platform. Buyers can also communicate directly with suppliers and obtain clarifications about any queries that they may have.
An added advantage of an online platform is that these marketplaces allow buyers and sellers to interact with an online community. This can be an excellent source of information for a small firm that does not have the resources to gather intelligence by other means.