DuPont and Deloitte leadership share insights on the future of chemical commerce and why it’s necessary to build a digital presence in the industry.
Customers are spending more time online. As a result, suppliers must accelerate their digital presence and inside sales capabilities in order to meet customers where they are. In a recent Knowde webinar, the President of DuPont’s Transportation & Industrials business and the chemicals and commerce leadership team at Deloitte discuss what the current state of the industry looks like, B2B commerce trends, and the future of chemical commerce.
The current state of chemical commerce
Traditionally, companies in the chemical industry have been slow to adopt eCommerce and digital concepts. Since the chemical industry is complex, there are many safety concerns to take into consideration and the cost of error is much higher—and potentially detrimental—in chemicals than in other industries.
However, chemical customers are becoming digital-first; they want and expect the ability to search for products, get quotes and samples, place orders, and check delivery statuses online. If suppliers don’t meet their customers online, it’s a large missed opportunity. When a customer is looking to choose a supplier and make a purchase, those who are operating offline will lose out on potential sales. Building a digital presence also creates operational efficiencies, lowers the cost to serve, and improves the customer experience.
Businesses who don’t have eCommerce capabilities are turning to companies like Knowde to help them accelerate digitally.
“Customers want better buying experiences from suppliers. The reality is, if you’re not online to meet your customers, then you may not have a seat at the table when they choose a supplier or make a purchase.”– Dave Yankovitz, Chemicals Consulting Leader at Deloitte
B2B commerce trends
There are many changes happening in the chemical industry driving more need for digital commerce.
End market disruptive forces are necessitating innovation. COVID-19 accelerated the need for faster innovation, as customers demanded new products and applications for medical devices and new plastics. This new speed pressured traditional R&D paradigms, and made companies realize that the problems they face go beyond what they can solve themselves. Co-creation and collaboration are now key to developing an efficient ecosystem in the industry.
Customers also have new buying expectations. They are accustomed to “Amazon experiences” and they seek that same quality of engagement in their business interactions. Customers want to know all of the products that are available and have an easy way to get technical support, insight into delivery status, and the ability to create re-orders.
DuPont, for example, has focused their digitization efforts on operational excellence, data quality, and working capital insights, acknowledging that digital tools drastically improve the user experience. However, their eCommerce capabilities have lagged. DuPont wanted to partner with leading companies in the field who are subject matter experts in both chemicals and digital transformation to quick-start their digital journey, so they launched a digital storefront on Knowde. DuPont’s digital storefront and presence is one of the many elements that they are working on to improve the customer experience.
“We think one of the future keys to eCommerce is to work with companies like Knowde, as we want our data to be more accessible.”– Randy Stone, President of Transportation & Industrial at DuPont
The future state of chemical commerce
B2B companies must digitize in order to make it easier to work with customers throughout the entire sales lifecycle – especially since customers are demanding better experiences.
Your products should be easily searchable and discoverable, customers should be able to engage with your team seamlessly to ask questions, and buyers should be able to make an online purchase with ease.
Social and technology changes will also accelerate eCommerce:
- Millennials have become the largest generation and workforce, and are more digitally native. Gen Z has started in the workforce as well and their instinct for digital engagement is even stronger.
- In digital eCommerce, integrations for things such as order statuses and deliveries are critical in making customers’ lives easier.
- High data quality is critical for businesses to learn about customer behaviors and to help better meet their needs.
“Your customers are demanding, and are already engaging in, digital experiences. They’re looking at digital sources – whether you have the tools or not.”– Paul do Forno, Managing Director of Commerce & Content at Deloitte
To hear more of DuPont and Deloitte’s insights, watch the full recording or read the transcript below.
Ali Amin-Javaheri: Today we’re super excited to talk about the future of chemical commerce. We’re gonna do a deep dive into the future customer experience and customer facing technology in our industry. Joining us for today’s discussion is Randy Stone, President of DuPont’s Transportation and Industrials business, which is a 6 billion dollar division. Randy is an amazing guest because he’s very well recognized by his peers as a thought leader on digital transformation in our industry – and he is not just talking about it, he’s doing it. Also, joining us is the chemicals and commerce leadership team at Deloitte. As I’m sure you guys all know, Deloitte consults many major chemical companies on leading topics in the industry from growth strategies and acquisitions to digital transformation. Duane Dickson is the Vice Chairman at Deloitte and global leader of the oil, gas, and chemicals practice. Dave Yankovitz is the leader of the US Chemicals practice and Paul do Forno is the managing director of Deloitte Digital and a leader in the commerce practice.
Duane Dickson: We at Deloitte certainly appreciate our alliance with Knowde and we’re glad to be part of this ChemTech series. This is an exciting topic – the future of chemical commerce.
Today, we’ll talk about the current state of chemical commerce. We’ll also talk about B2B and commerce trends, and the future state of the chemical industry as it relates to commerce. It’s a complicated industry. One of the hardest jobs to do is often to figure out where to find what you need and who to find it from. For the past 60 years, as the industry has matured and competition has heated up, we’ve seen gross margins get a little bit flatter over time. And it’s created the need for efficiencies because the industry has been a strong investment and has always returned good returns for investors.
And that’s gonna continue. So that along with increasing commercial sophistication, meaning consumers are more involved, customers are more interested in tools and techniques where they can do things themselves, and it creates an interesting set of trends for the industry.
The industry is in virtually every end market, and I would say Covid-19 has probably helped us understand a lot about the end markets of the industry. We’ve seen it involved in PPE, sanitizers, medical equipment, home cleaning, and personal care. We’ve also seen what less driving, less flying, less gathering can do to things like automobiles, housing, construction, infrastructure.
The important part here is it’s an industry that takes the long view – historically, 30 to 50 year capital investments. It’s been a global trader and a global partner of all different types of industries. But now we’re looking for speed – speed to market for new products, transparency of supply chains, customer and consumer engagement. And the new big word is agility. So how do we have asset intensity and agility at the same time? There’s 15 million people employed in this industry. It’s a very important industry as an employer. These are people who are very capable. They have a depth of knowledge and experience that’s grown over time and it leaves us with two questions to consider. Even though there are 15 million people in the industry, are the commercial organizations spread thin? And I think the second question we can consider is what will companies of the future look like in terms of skills and capabilities? And to get us started with that part of the conversation, I’m gonna move it over to Dave Yankovitz and he’ll start setting the stage for the current state of commercial in the chemical industry.
Dave Yankovitz: From what we see, chemical customers are going online. Customers want to search products, get quotes, samples, place orders, and check delivery status online. They want better buying experiences from suppliers. The reality is, if you’re not online to meet your customers, then you may not have a seat at the table when they choose a supplier or make a purchase. The reality is, if you’re not online, you’re offline and it’s a missed opportunity. There’s a lot of value in building your digital presence – it just makes sense. It helps you be more efficient, lowers cost to serve, creates better access to customers and improves the experience. So what’s the story about B2B commerce and chemicals? The pace of B2B commerce adoption and chemicals has been slow and up to now it has been slower than some of the other B2B industries. Chemical sales on US, B2B e-commerce sites have been growing at about 3.7% compared to 14% overall. The good news is that there is a foothold, even though numbers are small – we’ve seen steady growth in B2B commerce and as Duane mentioned with Covid-19, companies are going to look for ways to be more economical, more efficient, make better use of information and new ways to improve. Randy, as we get started with today’s discussion, I would like to pull you in and get your perspective on why B2B commerce hasn’t been adopted faster in chemicals yet.
Randy Stone: I think the simple answer is if we look at the chemical industry, it’s very complex. B2C is a whole different animal. If I order a book on Amazon or a piece of clothing and I get the wrong size, wrong book, the cost of that is very low. But in the chemical industry, we’re dealing in many cases with high tech industries, innovation driven industries, and safety issues. So, if I’m selling nylon into automotive or I’m selling Vespel into an aerospace application or Kalrez into semiconductors, the cost of failure is really high. So you really need deep subject matter expertise, you need innovation. But really for me, the driver of this kind of e-commerce channel is not to replace the subject matter experts that we have, but really to augment that experience.
We have an industry that has been fairly risk averse, and for the right reasons around safety and EHS. But I do think we see a tidal wave coming in this space. Covid-19 is only accelerating that. The other thing that I think inhibits the growth a little bit is that chemical industries and all people and companies in general tend to do things where they’ve got subject matter expertise, where they’ve got a knowledge base. So, I look at a company like DuPont in our business and we’re investing resources on chemistry and application development. If a customer wants better thermal management and safety, we’re the right company. But we don’t have that inherent digital e-commerce capabilities. So now we’re turning our attention to outside providers, companies like Knowde for example, working with subject matter expertise to do that. So I’m really confident we’re gonna see an acceleration, but there is a recognition that the chemical industry is complex with high safety and regulatory regulated industry.
Dave Yankovitz: Looking at history, it has taken a while for other new technology to catch on – just look at the internet or other B2B marketplaces. Some started more than 10 years ago and they finally now have a good presence. There’s definitely a great opportunity in front of us and, and we’re really just starting to scratch the surface.
The industry has come a long way from those green screens and paper faxes to place orders, but still has a long way to go. We’re seeing investments to modernize plans and facilities and as that happens, it’ll bring commerce more into an accelerated mode. It’s clear new technology is opening the door to share information, place orders, and collaborate in new ways. But you may be asking the question: Why is it needed?
We are seeing a few imperatives changing across the industry that will create more of a need for digital commerce. Most of these changes started before Covid and now with Covid seem to be accelerating and market disruptive forces are driving the need for faster innovation. New products and applications are needed to meet new demands overnight. This new speed is pressuring traditional R&D paradigms. Solving the problems facing us at times goes beyond what one company can do by themselves. One example is to come up with a better way of chemical recycling. It’s clear companies need to co-create and collaborate more and maybe even play a role in an ecosystem. A third change is the reality that your customers have new buying expectations.
Consumers have enjoyed better buying experiences and are seeking that same quality in their business interactions. It’s providing that Amazon type experience to your customers. What products are available? Where’s my delivery? I need technical support. I want to reorder by creating digital ways to connect with your customers. You help them innovate, collaborate, and create better customer experiences.
Randy Stone: There’s a really strong recognition that digital tools and e-commerce have a chance to really improve the user experience. And so if I look within DuPont, for example, in our business, I’d say we’ve done a really nice job accelerating our digital platforms in terms of operational excellence, better data, better working capital insights, and better insights about how we run our plant. But the e-commerce journey is not as far along as the other side of the equation. So we’re trying to build the capabilities in-house in terms of people and processes and systems, but really partner with leading companies. So we made a decision in March of this year with Ali and his team at Knowde to launch our storefront on Knowde. We’re really three or four months into this, but we’re delighted to be there. We think that working with companies like Knowde is one of the future keys to e-commerce.
Paul do Forno: I think that there’s some reluctance, there’s always this hurdle to get over. As soon as you get over the hurdle and your competitor does it however, then magically many people follow. And so I think it’s something that, especially as it’s an evolution and people are moving towards it, that’s probably the primary area of just getting over that industry hurdle. In fact, that’s a good segway into thinking about the future of B2B commerce. So when we talk about the future of B2B commerce, it’s really talking about the future of B2B sales. And why I say it that way is because B2B commerce is not only about the ordering, it’s about that whole life cycle.
And why is that important? Because your customers are demanding that better experience all the way throughout. So B2B commerce is just the digitization of making it easier to work with your customers through that whole sales life cycle. As Dave mentioned, chemicals have been slower to adopt commerce. I’m gonna share a few stories and a little bit of examples from the rest of the industry. As you can see, from an overall perspective, the rest of the industry has actually grown much faster. And logically, chemicals have a much more complex supply chain. But the opportunity now is that there’s a lot of platforms out there and innovations that are coming out that will now make it easier for commerce to be adopted within the chemical industry. And so you get the benefit of these tools that didn’t exist, that had to be created, have now evolved, and all these new services are popping up.
So as we said, why it’s so important is that your customers are demanding these user experiences that are better. And we did some research – the summary is that your customers are demanding and are already engaging digitally, whether you have the tools or not, they’re looking at other sources. And so it’s so important in that first engagement – how easy is it that your products are searchable and discoverable.
One of the things that a lot of our customers that we’ve seen in the B2B space find to be really important is simple things – like the number one value add on ordering is around saving a quick reorder. Many of your customers might only order from you once a month, once a quarter, and most of the time it’s very similar orders. Understanding that insight, putting the customer first and that focus, that’s how you really get value. And so companies that have focused on that customer journey have gotten a lot of value out of that.
The last example I’ll share is around service. So many times people forget that customer and B2B commerce service is also a part of it – Where’s my order? What’s the order status? Where’s my truck? And so the more that you can empower your customers to use that online electronically, that’s a cost saving and it’s building that better customer experience.
So as we think about the future of e-commerce, you also need to be aware of what’s going on holistically, both from a societal and technology standpoint, because that’s where commerce sits. Just recently millennials actually became the largest generation. They are the largest workforce out there, and for the most part they are much more digitally native. Even Gen Z has started in the workforce. They want digital engagement, they are digital natives. Many of the old sales guys are retiring. Also, if you think about the digital technology in any e-commerce business, there’s probably 20 integrations with little tools for order status, supply chain, all those deliveries. So you always have to be connecting the dots and being ready. Again, the focus of keeping your customer and making their life easier. And the last thing that’s so important for technology that is many times overlooked, is the wealth of data that you get. If you are engaging digitally, you start to learn the patterns of how your customers interact and you can grab that data and down the road you can help mine that data to meet their needs better.
If you want to get started in commerce, there’s really a couple core models of getting started. Primarily most people get started in building their own e-commerce core platform, But also one of the biggest growing areas, both for innovation and extended opportunities is around marketplaces. A marketplace like Knowde is a great example of an innovative marketplace and a way to learn and sell into ways that might have been areas that you missed before.
Randy Stone: As I mentioned, in March we went ahead and launched with Knowde. We’ve got a storefront on Knowde, and it has all of the products and chemistries for DuPont from the transportation and industrial space. So if you want to find information on engineering polymers like Zytel or if you want to see some of our performance resins like Delrin and our specialty materials and silicones and adhesives, it’s on there. It was a pretty simple decision – Did we want to try to invest to do this internally within DuPont and our business? Or did we want to partner with someone that I considered best in class in this space? And for me it all boiled down to what was the best return on investment. And I’m a big believer in Ali, I’m a big believer in Knowde.
I invested about two years in due diligence before we made the decision to launch. And I was convinced that their capabilities to upload all of our information, to develop the online tools to make the buyer experience better, resided more in Knowde than it did in the existing DuPont T&I space. So we made that decision – we view this as a really long-term relationship. We’re gonna build our capabilities over time. The first thing we wanted to do is make sure that our data was readily accessible. And we’ve done that. We’re gonna be moving into the buyer experience as we progress throughout the year to have e-commerce be a bigger part of that. But for us, this was a no regrets move. I’m really pleased with the progress that I’ve seen so far.
I think this digital component can help us not only improve the buyer experience, but improve the enterprise value of DuPont, and all of the companies in this space. I think digital is a very important component and one that we’re gonna invest in in the future.
Dave Yankovitz: During the current crisis, businesses have worked faster and better than we had imagined months ago. It’s already a bit of a cliche to say Covid-19 crisis has accelerated the shift to digital. But the reality is, the best companies are going further by enhancing and expanding their digital channels. Re-imagining the future of commerce and chemicals will require a shift to providing better customer experiences. This will include expert discovery to find more new materials, new additives to innovate better seamless customer engagement, enabling customers to do everything online from initial research to quote, to purchase to technical service and returns, and tailored digital channels such as portals and marketplaces. And the more we do digitally, the reality is the richer analytics we get about purchases, customers, trends, markets, and ultimately improved experiences. This will also enable sales to use tools and information needed to create value beyond the sale, and create those long standing customer relationships. Many of you have already started this journey. You are reimagining commerce to create a better tomorrow for your business. We are definitely in uncharted territory in unprecedented times, but new doors are opening.