ExpertConsultant

e-Marketing and e-Commerce in the Chemical Business

In recent years e-Commerce and e-Marketing started to move steadily into the new fields of import-export wholesale operations. These use to be a very conservative and “catalogue-based” sectors , with the ties between companies being developed in years or even decades and markets being shared between several big names. The emerging new trends, as it was expected, have number of teething problems and wrong solutions, where business models are either based on B2C e-Commerce scheme or, alternatively, are turning into an "online catalogue" system.

Let us discuss in this article specifics of chemical market and what type of changes it makes in the existing e-Commerce business models.

Many times I came across a following request from a client: “A want a website like this <Big Brand Name>, so customers would see that we are a serious company”. Looks like a straight-forward and easy concept, but it is entirely wrong. It is wrong because it doesn't take into account how customers are actually coming to your e-Venture. With big companies it is simple: they are NOT being searched, they are being approached directly. I call it a “type-in” system, e.g. you know what you are looking for and you just type www.<Big Brand Name>.com. And this is in fact the whole of their e-Commerce scheme. After visitor is on your website then it’s up to you how to present the information and guide him through the system. But what if you are not a big brand name but medium or small manufacturer or trader? Do you think this system would work? No, it wouldn’t, so you should use a completely different approach. Anyway, making your own e-Commerce venture to look like someone else’s is a bad idea, you just become a pale copy of the original.

Second common approach is: “Let’s put our catalogue online”. Well, no problem, it’s easy. As a result you just get a cheaper version of the catalogue and… this is actually it, nothing to be exited about.

There is also third or mixed approach, combination of online catalogue and external provider. By external providers I mean large number of chemical “marketplace” websites, that sprung in the last few years in different countries. Being a very good idea it, unfortunately, has a serious setback – customers and suppliers are not “vetted” and therefore this opens way to many non-genuine, “price hunting” or simply fraudulent enquiries. We usually call it “another agent hopping” and those types of enquiries are often easy to recognize as the do ask for unreasonably large quantities of short-supply materials and mostly come from free e-mail addresses. Unfortunately many companies would notice that up-to 99% of all enquiries received from such marketplaces fell into the above category. Plus, registering with such websites creates a tremendous amount of unrelated spam due to high activity of the address-hunters.

So what a company should do to get on to the e-Commerce ladder? First of all you should take into account all the specifics of the current market situation and modern trends. Let us give just a short description of the current situation so the objectives would become clear.

In recent years manufacturing is actually shifted from the “old places” to the new, well equipped large venues in Far East and Asia. Only to mention that the majority of multinationals nowadays keep their facilities in countries like China and India or even close their manufacturing units altogether and use contacted firms to produce chemicals. But at the same time those contractor firms are becoming increasingly worried of the “margin unfairness” where their produce is sold at much higher prices than being bought from them by their larger partners. Therefore they are becoming much more active on the market and instead of using the multinationals as their sales and marketing arm, are trying to start their own campaign and trade directly or via own agents. This creates a shift in many market fields, especially areas of industrial chemicals. Brands are being replaced by generics creating a new feature of modern chemical market – “generic war”. Large and established Western companies are becoming really worried and trying to tie-up their old clients into time-based contracts giving them longer and longer deferred payment terms, providing technical services together with the product, etc. At the same time their customers by doing simple math are beginning to realize that:

  1. Product that they are getting (whatever brand it is) is actually exactly the same that the generic version and in many cases manufactured in the same country and even by the same factory.
  2. It is much more profitable for a company to keep an in-house and locally trained chemist for all technical and formulation needs.
  3. Even the best credit terms could not be compared with the price given by alternative sources. So companies now prefer to pay for the product immediately and get money elsewhere (e.g. from the Bank) where even with the interest payable on the loan, it is cheaper than it was with the usual credit terms.

The above has created a serious in-flow of information to the previously closed and conservative markets. The information is in many cases chaotic and does not provide clients with a firm basis for switching suppliers. But at the same time it creates a contra-flow of search requests from buyers for new suppliers and manufacturers.

The e-Marketing venues correctly placed between these two torrents are destined to thrive and create the best ROI in the industry while implementing the new e-Marketing strategies.

Especially for this particular type of e-Commerce I’ve developed a strategic e-Marketing system codenamed “Dual Star”. The system was successfully implemented on the number of serious websites and it is proven to be highly efficient.

“Dual Star” is my own commercial know-how but at the same time, without getting into too many details, I would like to highlight some important points from the system which are mostly applicable to the chemical business.

So let us introduce some common misconceptions and how the principles of the Dual Star work to eliminate those misconceptions and bring the best out of the new B2B e-Marketing.

  • Bringing potential clients in. Most of the companies create a single “entry point” (website) to attract customers through links and searches. This system I usually call single-core navigation. Here the website is a “core” and finding required product involves navigating through the core itself, layer by layer. So the idea is to bring customer from general information pages through system of navigation into the desired place – almost like a one-way street. This is a most common concept but has several draw-backs. For example something that could be called a three-click rule. In fact during many years of designing e-Commerce solutions in B2B environment and analyzing website logs I came into a conclusion that most of the visitors tend to leave the website after the third click on the link. So if you could get your visitor to the required information within three clicks then you would keep him inside your space, but if not then he might leave. For the companies with large number of products and complex naming systems like in chemical business it is quite a task. Therefore Dual Star uses a combinational navigation system that creates the two-way flow of information and brings visitors to the correct page much quicker (often it is even the very first page they see why entering your e-Marketing space).Unfortunately I can not give more details in this section as information is commercially privileged. At the same time if interested you could always contact me in order to discuss this issue further and have a tailor-made highly effective e-Marketing solution for your own business.
  • Ill-advised cross-platform e-Commerce tricks or “do not hide the information”. Many times I have noticed a simple but really off-putting method used on chemical websites. If visitor requires simple information like typical COA or MSDS then there is a link with “please use this form to contact us for the information”. Unfortunately I know where it is coming from. It is happening when using B2C specialists to make B2B systems. In B2C you work on sheer number of customers and usually require their details for secondary marketing e.g. sending a newsletter or other (in many cases unwanted) materials hoping that 0.1% will respond. In B2B you usually don’t have this luxury of thousands of potential buyers, so attempting to get their details at this stage is completely wrong. The reason is simple, by hiding common information you use off-putting technique for up to 25% of visitors and gain probably 0.1% because business visitors often want information here and now to compare with their requirements before contacting you. So the objective would be: do not ask anything, even contact details, for the information that should be freely available to your visitors.
  • Geographical distribution. This is an approach which is mostly being associated with large companies like Multinational Corporations creating separate entries for almost every language and geographical zone. For smaller companies this type of distribution is not feasible or cost effective. Meanwhile it is worth knowing that some steps should be taken to create a comfortable experience for all your visitors from potentially important regions. In that case you should concentrate on the following:
    1. What type of information visitors from particular region would be mostly interested in? You should take into account geographical market differences and provide the fastest navigation through your space.
    2. Which search engine is the most popular in the region? This is essential as optimizing your system for some of the search engines affects positioning in others. Therefore this is a very important knowledge and you should fine-tune specific pages on your information space to specific search system.

Actually the real e-Marketing in chemical distribution is just starting to gain a momentum and it is probably one of the best times to take advantage of its very fast development. Please use the contact page to discuss your particular requirements.

February 2008

Copyright © 2008 M. Laziev. All Rights Reserved

If you are interested in the above issues, you are welcome to join my group on LinkedIN. Please follow the link below.

     
Home | About | Services | Clients | Contact | ExCo Blog | ExCo Forum | © 2007 M.Laziev. All Rights Reserved.