Chemunity - Pragmatic Procurement of Chemicals

	Home > About Us >

	ChemUnity.com Arnhem, The Netherlands - February 28, 2000 - The growth in trading of chemicals on the internet can fairly be described as explosive. In recent months many major producers have signed up with the increasingly well established third party trading sites, usually to facilitate raw materials purchasing rather than product selling. Is there room for more players in the chemicals e-commerce arena? The answer, says Herman Rijks, of newly launched ChemUnity.com is a most definite 'yes'. He and partner Mark-Jan Terwindt, both formerly with Dutch distribution firm HCI, believe they have identified a lucrative niche market and developed a distinctive business model to serve it. Rijks explains that, whereas the likes of ChemConnect and CheMatch offer global trading in large volumes of petrochemicals, ChemUnity will focus in west European business carried out at the single to five-truck level. 'These are medium-sized buyers, lying between the large strategic purchasers and small lot purchasers,' says Terwindt, and as such have their own service requirements. He estimates there could be up to 10.000 prospective users in Europe. Their site will differ too in that only set products will be posted up in the site from accredited suppliers. Buyers, also registered, will be able to choose what they want to buy from a menu of chemicals, and ChemUnity will forward their requests to the suppliers, in the form of 'firm enquiries', using email and/ or SMS telephony. Suppliers then have 25 hours to respond to these purchasing enquiries with an offer of a firm price, including freight and tariffs, etc., to make offers easily comparable. ChemUnity then automatically picks the best order and forwards this to the buyers. Communication with ChemUnity is possible not only by PC-based internet but by WAP telephones, so that sellers can be advised of enquiries and submits even if they are traveling. The approach, explains Rijks, means that buyers and sellers do not need to be constantly looking at a live trading screen. Orders are placed on lowest bid over the 25-hour period, and not on a 'first come, first served' basis. Also he adds, it takes the emotion out of the process, offering agreed terms of transactions and ensuring that buyers the best price automatically, and that sellers are not troubled by speculative enquiries. 'Enquiries entail confirmed transactions unless none of the quotes lie within the range indicated by the buyer,' clarifies Rijks. Other significant points of the ChemUnity business model are that it gives credit insurance on all transactions generated. For this, explains Rijks, two things are essential: only approved buyers and sellers can do business on the site, and only predefined commodities are offered. Also, there is a standard contract and established legal framework under which the transactions take place. This will detail set remedies and penalties- 'fair but not overdone'- for late delivery or payment, off-spec material, etc, with a clear arbitrage route. ChemUnity was founded late last year with financial backing form Dutch venture capital, and was launched last week in Amsterdam. Trading is expected to commence in March with first transactions in April. Partnerships and/ or cooperations have already been established with CSC for software development, Compaq (hardware, systems integration and security), Nokia (WAP and SMS), and NCM/ SwissRe (credit insurance). Gilde IT fund and Optimix rose initial funding of €1.5m. Rijks and Terwindt are now looking to recruit eight product managers and 14 sales persons to bring buyers and sellers to the site. They expect the first products to include caustic soda, soda ash, BTX, acetyls, solvents, acids, ethanols and phosphates. The aim is to sign up lead suppliers for each material and then add others, so that there will soon be at least four to five seller behind each product offered on the site. 'Our aim', says Terwindt is to attract "serious" clients. And in this he is optimistic. Use of ChemUnity is optional, he explains, 'but it is not a very big decision… in fact it's an easy, small step to take towards e-commerce'. He emphasizes the low costs of the service- the seller pays a commission of around 1,5-2,0 % depending on product, including the credit insurance- and the small amount of time to monitor business just once each day. It could just be a winning formula. Source: European Chemical News, February 28th 2000