Virtual marketplaces in the chemicals sector: B2B turnover expanding strongly

Virtual marketplaces in the chemicals sector: B2B turnover expanding strongly (24 January 2002)

• In the chemicals industry, virtual marketplaces are becoming increasingly important, alongside distribution through company portals. This demands stronger integration of internal business processes and optimisation of the supply chain from the suppliers through to the customer.
• Many large chemicals companies are already active in several marketplaces. This allows them to shape the online exchanges according to their own requirements in order to gain cost advantages and a competitive edge.
• Sooner rather than later, competition will also compel small and medium-sized firms to increase online links with their customers and suppliers. Competition will become fiercer, particularly in supplier industries, which will have to prepare heavily for e-business.
• In the German chemicals industry total (online) B2B sales look set to expand from EUR 16 bn in 2001 to EUR 25 bn in 2005. In 2010 we expect them to reach EUR 57 bn. That would be roughly two-fifths of total chemicals sales (EUR 142 bn) compared with only 15% in 2001.
• In 2001 only one-fifth of B2B sales in the chemicals sector were transacted on virtual marketplaces. This means that the bulk of the B2B business is done directly between manufacturer and customer, not through a marketplace. From 2005 the ratio should swing in favour of marketplaces; by 2010 their share could rise to 60%.
• We expect online trade in chemicals also to rise considerably in the EU, but its share in total sales will probably continue to lag far behind the figure for Germany, where the chemicals giants are out front in online business.
• Despite favourable sales prospects, the number of chemicals marketplaces will fall, with probably only one-fifth of the present online exchanges surviving. Reasons: economies of scale play big in this business; additionally, the large chemicals companies prefer to use their own marketplaces; quite a number of virtual marketplaces have already merged because of the high investment required in infrastructure, and others have closed down entirely.

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