Buyer’s Guide: 5 Things to Keep in Mind when Buying Chemicals Online
The unstoppable triumph of digitalization has changed the procurement behavior of many buyers and sellers in the chemical industry over the last few years. Especially young and digitally savvy procurement specialists buy chemicals primarily via online search engines and marketplaces, as these platforms are more cost-efficient and transparent than analog purchasing. However, similar to non-digital procurement, there are certain criteria that should be considered before purchasing chemicals. In this blog post, we will use five procurement criteria to explain how you can find the desired chemicals quickly and efficiently on the Internet.
Entry into Online Chemical Purchasing: Choosing the Procurement Platform
1. Procurement Platform
Once it has been determined which chemical is required, the choice of online platform plays a decisive role in the further purchasing process. Since there are now over 200 procurement platforms worldwide, mainly in the form of digital marketplaces, it can be useful to gain an overview of the most relevant marketplaces. In our marketplace report, which is published and updated annually, we take a look at over 60 well-known marketplaces based on different criteria. For those buyers who do not prefer a special marketplace, chembid is the first point of contact. As the world’s largest metasearch engine for chemicals, chembid offers numerous user services and over three million product offers from more than 130,000 suppliers on its own platform (as of September 2019). On chembid, the offers of various suppliers and marketplaces are bundled, prepared and made comparable. Since chembid is a metasearch engine, products cannot be purchased on the chembid search engine. Instead purchasers are redirected to the respective marketplace or producer website.
The Product Search: Product Features and Prices
2. Characteristic Product Properties
Each chemical has certain characteristic properties. For a procurement specialist of chemicals, it is essential to know categorizing differences in order to make the right purchasing decision. The so-called CAS numbers allow a precise and unambiguous chemical search. The CAS system is an international standard identification for all chemical substances that assigns a unique registration number to chemicals stored in the CAS database. And although the CAS database is updated daily and is the most comprehensive source of information on chemicals, not every chemical has a CAS number. The search for chemicals without CAS numbers can be limited by trade and trivial names. On chembid, products can be searched by product, trade and trivial names as well as CAS numbers. Products with a certain chemical concentration can be searched by adding the percentage after the product name.
The purity degree of a chemical plays a special role in the selection of the product. It gives an indication of the proportion of the chemical substance in the total substance mixture. The choice of the chemical purity class is always determined by the intended use. Although there are no officially recognized quality levels, the following five degrees of purity have emerged out of pharmacology (listed according to increasing degree of purity):
- Technical, commercial and industrial: It is a line of chemicals with ordinary quality. This kind of chemical is used especially for commercial and industrial purpose.
- Purified: It defines chemicals which are free from excessive foreign matter. Most household chemicals are purified, thus making them suitable for many purposes except analysis.
- Practical / Synthesis: The chemicals have a medium purity with minor impurities. They are often purified from technical grade chemicals. However, the impurities do not have any negative effects on the synthesis and are suitable for this purpose.
- Chemically Pure: These chemicals are mostly used for general applications.
- Reagent: „Reagent“ labeled chemicals have a high purity and mostly used for analytical purposes. There is always a certificate of analysis which shows the maximum limits of impurities.
In principle, high-purity chemicals can also be used for purposes that require chemicals with a lower degree of purity. However, this is not advisable from a financial point of view, as an increasing degree of purity results in a higher price.
Due to the lack of standardization, search engines and marketplaces have different purity classes. On chembid and many marketplaces, the easily understandable degrees of purity, such as industrial, food processing or agricultural purity, allow conclusions to be drawn about the intended use and thus facilitate the appropriate selection. Therefore, buyers can deal less with pharmacological terminology, and concentrate on the product search thanks to the intuitive degrees of purity on the digital platforms.
3. Product Price
Chemical prices are usually subject to high volatility. The reason for the regular price fluctuations in the chemical industry is the high dependence on crude oil. In turn, the price of crude oil is largely determined by production and sales volumes. About 90 percent of all chemicals are based on this fossil raw material. As a result, many chemical producers and sellers do not quote a price or only provide price ranges. On chembid you can find offers without prices as well as products with exact prices or price ranges. Sorting by price is just as possible as filtering by product with or without price. Furthermore, the prices can be shown in Euro, US dollar or Chinese Yuan.
Since chemical prices are subject to constant price fluctuations, the purchase of chemicals is often a major challenge for inexperienced chemical buyers and sellers. Under the name chembid Price Trend, chembid publishes free monthly price information for some of the most frequently traded chemicals. The resulting market transparency serves for those responsible for purchasing and sales as orientation and supports them in their daily business.
Final Phase of Procurement: Supplier Location, Delivery Time and Incoterms
4. Supplier Location and Delivery Time
The next step is determining the supplier’s location. The choice of the location does not only influence the commercial language, but often also the delivery time of the product. For domestic purchases, the preferred language is usually the national language. If chemicals are procured across national borders, English language skills are a prerequisite for further agreements or questions, as the English is recognized as an international commercial language. Increased distance between supplier and delivery location usually leads to increased delivery time. If the delivery time plays a minor role, it can be worthwhile to look at more remote supplier locations, since the prices between the trading regions can vary considerably due to different price calculations. Among other things, the chembid search engine enables buyers to filter product searches by supplier location.
5. International Commercial Terms (Incoterms)
Once the desired chemical has been found, decisions on transport, costs and risk must be made jointly with the seller. The „International Commercial Terms“, also called Incoterms, define the roles of buyers and sellers with regard to transport conditions and other criteria. Incoterms are recognized worldwide and have been published and updated regularly by the International Chamber of Commerce since 1923. They are usually given in three letters and cover the entire transport route from the supplier’s location to the place of delivery. Incoterms divide the delivery route into individual transport sections. The two most common Incoterms in the chemical industry are EXW (Ex Works) and FOB (Free On Board). If it is agreed that the chemicals will be transported under EXW conditions, then the buyer is responsible for organizing the transport along the entire transport route, incurring the resulting costs and taking responsibility of the corresponding risk of loss or damage. In practice, it is usually the commissioned logistics companies that take over the organization and bear the risks. Although the product costs are lower compared to other Incoterms, due to the transport costs being included in the product costs, the takeover of the transport results in an organizational and financial effort in the search for a suitable forwarder and customs clearance. In the case of FOB, i.e. a „port to door“ delivery, the seller is responsible for all local costs and risks up to the port transport. The subsequent cargo handling and all subsequent transport processes are handled by the buyer’s logistics company. In addition to the previously mentioned Incoterms, there are other commercial terms such as FCA (Free Carrier), DAP (Delivered At Place) and CPT (Carriage Paid To …).
Are you having difficulties getting started with the digital procurement of chemicals? With the help of the chembid search engine, you can easily put your newly acquired purchasing know-how into practice. If you should encounter any obstacles during your chemical search, the chembid team will be there to support you.