7. Competition

As discussed in our business model section, several online intermediaries are already in the market. In this section we take a look at the market landscape

1. Most online platforms globally and India are focused on discovery of suppliers and lead gen. They do not offer end-to-end order fulfilment and monetize via listing fee and advertisement. Some players in this segment are IndiaMart, Chemarc, Carbanio
2. Buyer-pick or ‘Chemazon’ model players also exist but they only cater to retail customers and laboratories, selling small quantities at fixed prices. Players in this segment are Biomall, ibuychemikals (subsidiary of Pon Pure group)
3. Platform-fulfilled players in India are mainly large distributors and manufacturers setting up their own online platform for discovery, lead-gen and sale-cycle management. These platforms typically only stock a few suppliers and work on an RFQ model. This segment drives most of the online b2b chemical volumes. Notable examples: SigmaAldrich, Ponpuregroup, Ofbusiness

Notably, there are no major online platforms that are focused only on foreign buyers. The existing players do take requests from outside India but have high minimum quantity requirements

8. Final Takeaways

• China+n is a strong tailwind for the chemical market. Market characteristics in specialty chemicals offer a great opportunity for aggregation play unlike other verticals such as textiles where Bangladesh and Vietnam also compete for demand
• The sector is hotbed for M&A activities and presence of scaled listed companies in the sector give comfort and clear path towards an IPO
• Growth trends and macro suggests that new age B2B aggregation players could be built in this category. However, market structure and participant behaviours offers unique challenges that are tough to solve

Main challenges present are:

Buyer side :

1. International buyer demand is hard to scale. Based on conversations with multiple parties it appears that none of the present players have been able to meaningfully crack it. Founders with deep international connects have the best shot at solving this
2. Buyer long term behaviour in this industry is to work with limited trusted suppliers. While large players are unlikely to ever use intermediaries, there is a real risk of small buyers eventually sidestepping aggregator

Supplier side :

1. Unutilized supply-chain does not exist - it is unclear where extra production will come from in the small manufacturer segment. However, this is likely not an issue until the aggregator reaches a scale of $200-500 mn GMV
2. Building a reliable supplier network of small players that adhere to international quality standards can be challenging requiring aggregators to invest in quality testing.