What B2B Chemicals Trade Modernization Means For The Everyday Consumer

From the shampoo we use to wash our hair to the shoes on our feet, chemicals are almost always at the core of the products surrounding our everyday lives. Yet despite the prolific and immeasurable impact of the chemicals industry, rarely is thought given to how the creators of these products source, procure and pay for those ingredients.

Aleks Lyng, chief financial officer of Knowde, recently told PYMNTS that, until recently, this space had very little in the way of digitization and modernization — especially when it came to trade and B2B payments.

In a recent interview with PYMNTS, Lyng dived into the specific, nuanced challenges of the chemicals market that has kept buyer and seller interactions offline for so long. By participating in the broader journey of B2B commerce digitization, the chemicals space not only has an opportunity to modernize and enhance cash flow through supply chains but also to make significant impacts on product development and innovation throughout the broader economy.

A Streamlined Search

Like so many other industries, the chemicals and ingredients market has historically relied upon manual processes to connect buyers and suppliers. That means faxes, emails, phone calls and in-person meetings.

Also, like other sectors, this space is finally heeding the pressure to migrate B2B commerce into a digital setting, thanks largely to the demand among buyers to replicate the B2C online shopping experience into a professional B2B setting.

Significant innovation in the B2B eCommerce space may have laid the groundwork for this sector to embrace digitization, but it cannot address the specific challenges of this market, said Lyng. The area in which that this is perhaps most evident is in product sourcing and descriptions.

“This industry is really opaque,” he noted. “All of this wonderful product information is hidden in PDFs, scattered across 15,000 websites around the world.”

This forces potential buyers to manually seek sellers, assess their product catalogs and order samples — an inefficient workflow that Lyng said prolongs the buying journey, stifling product development and innovation, and even increasing costs for consumers in some cases.

Also acting as a barrier to modernization are legacy B2B payment flows and trade credit processes. Chemicals producers are “conservative by nature,” said Lyng, and are not always keen to extend credit to buyers. In a highly complex and regulated industry, sellers do not have the capacity to invest in underwriting or fulfill orders for late payers.

Modernization Through Education

Knowde is stepping in to address these pain points and others, offering a platform that consolidates and unifies suppliers’ product catalogs from around the world, while also operating as the intermediary to extend credit to buyers and accelerate payments to sellers.

It’s a much-needed boost of modernization for a sector that continues to struggle with digitization, despite ’the push from buyers for an elevated online experience.

According to Lyng, everything from product sourcing to B2B payments has the opportunity to be optimized for the chemicals industry, but merely developing B2B eCommerce technology isn’t enough to transform the space. Rather, education is (and will continue to be) key.

“A component of education needs to happen on behalf of most of these suppliers, who have lived in an offline world for so long,” he said.

Whether it’s a household name like Johnson & Johnson sourcing ingredients for their next product, chemicals giants like Dow Chemical and DuPont looking to expand revenue streams or smaller innovative firms looking to capture market share, the chemicals arena needs more streamlined ways to connect buyers and sellers. The widespread implications of progress, said Lyng, will touch virtually all consumers’ lives.