Chemical Industry Buyers Find New Supply on Online Marketplaces

Logistics are an essential part of procuring chemicals. It shouldn’t take three weeks to find the proper chemical and then another two to three weeks to figure out how to ship it from A to B.

That’s the problem ChemDirect has been in the business of solving since its founding in 2020.

ChemDirect is an online marketplace for specialty chemicals designed to deliver significant time and cost savings for chemical buyers and sellers.

With integrated logistics planning, credit terms and real-time inventory shipped directly from vetted suppliers, ChemDirect seeks to make buying chemicals drastically easier than existing channels across a wide variety of industries.

“We’ve designed logistics into our platform, David Haase, ChemDirect’s president told PYMNTS. “So when you’re shopping for a chemical, we are considering the entire landed cost and the planning of the logistics portion of the procurement as you shop.”

Since chemicals are an essential component for a lot of what manufacturers are producing, ChemDirect is something of an early warning system for downstream supply chain issues.

“Chemicals are foundational, in terms of several different consumer products, and we deal with a lot of different verticals. So, we probably are an early signal for what’s coming,” Haase said.

The Lure of Faster Payments

The industry hasn’t had anything like this available to them before, and it’s challenging to get people to agree to do business online, regardless of how many bells and whistles are offered. It’s an industry that’s been resisting this for several years, Haase said.

The company recently announced the introduction of ChemPay, which is intended to expedite payment to suppliers in a matter of days. Small and mid-sized companies in businesses where net margins are sometimes in the single digits are incredibly thoughtful about cash flow, especially heading into an economic slowdown or recession, so speeding payments promises to be a powerful incentive for participation.

“It’s new for the industry, and we’re partnering with Balance to quickly qualify those customers. We think that’s an important part of being able to serve small customers in an online way.”

Digital Supply and Demand

According to Haase, the biggest unlock has been the supply chain challenges of the last couple years, which have driven both buyers and sellers to join networks like ChemDirect, as buyers seek new suppliers and suppliers seek new customers.

“It’s been buyers wanting to be able to more efficiently find supply,” Haase said.

According to Haase, U.S. suppliers are typically at capacity, so they’re allocating the supply that they do have. Overseas suppliers, including many from China, where a lot of chemical manufacturing originates, are looking to come to the U.S. for the first time.

Vetting these overseas suppliers takes a degree of risk out of the purchasing process for buyers.

Faster Chemical and Cash Flows

ChemDirect aspires to make chemicals and cash flow faster in tandem.

“I think it’s the same principles that are driving what we’re trying to do in terms of innovation. Meeting the customer where they are and finding solutions that work at the point of sale. So quick qualification of new customers, international customers, and then carrier financing as well. So the way we frame the procurement of chemicals is more holistic. We’d love to see more flexible solutions at the point of sale that can be done at the speed of procuring chemicals online, which is which is in real time.”

The company is working with new Series A investor Schneider to bundle carrier payments with chemical procurement.

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