The Pros and Cons of Small and Large Chemical Distributors

Read time: 5-6 minutes

In today’s edition, I am going to focus on the pros and cons of different sized chemical distributors, looking at ‘small’ vs ‘large’ distributors.

First, let’s define what I mean when I say ‘small’ and ‘large’, as it’s all relative. In the EU, there are A LOT of chemical distributors and agents and so I think about it as a combination of revenue, employee numbers, market reach, operational scale, and client base.

A smaller chemical distributor is operating on a more local or regional scale, with annual revenue in the lower millions, usually with a limited number of staff. Operations are more focused on personalised services, and direct client relationships, catering to a smaller and more specific client base.

A large chemical distributor is, well, the opposite…substantial revenue, big workforce, extensive market reach, across multiple locations. Resulting in a broad product range, with extensive supply chain networks, which cater to a diverse and wide-ranging client base.

You might wonder, “why should I care about this?”

Well, if you’re involved in purchasing (or supplying) chemical raw materials, knowing the differences can be really helpful.

Often, businesses overlook important aspects, and focus solely on price or a recognisable name, which can lead to missed opportunities and suboptimal partnerships.

I’ll explore the differences between:

1. Customer Service Levels

2. Pricing

3. Overall Capabilities

4. Supply Chain

5. Partnership and Collaboration

6. Market Insight and Expertise

"We need to be nimble and agile, but we also need to scale." – Jeff Bezos

As with last week’s topic, this is another one which I’ll unpack in greater detail in the future.

Customer Service Levels

Small: typically offer more personalised customer service levels. Their smaller size allows for closer relationships with clients, often providing bespoke solutions, and quicker more flexible responses to customer needs.

Large: while they may have more formalised customer service processes, they may not have the same level of personalisation, and often have a higher turnover in staff. They do, however, often have dedicated teams for customer support and are equipped to handle a large volume of queries efficiently. 

Pricing

Small: may have higher per-unit costs due to lower economies of scale. However, they can offer more flexible pricing structures and may be open to negotiation, especially for long-term or loyal customers. It’s often the case too, that the rep both buys and sells the product you are discussing, allowing quicker responses to price queries, and a more in-depth knowledge of the supply chain.

Large: typically benefit from economies of scale, allowing them to offer more competitive pricing, especially for bulk orders. However, their pricing structures are often more standardised, with less room for negotiation. Conversely to the above, the sales reps do not have direct control over purchasing.

Overall Capabilities

Small: usually excel in speed and adaptability, however are often more limited in their range of products, and technological capabilities.

Large: much broader range of products and services, backed by advanced infrastructure and technology. They are well-equipped to handle large-scale operations and complex logistical requirements, although often aren’t as quick to adapt, or capable of adapting to individual customer needs.

Supply Chain

Small: often have simpler supply chains, which can be advantageous in terms of flexibility and speed. However, they might be more susceptible to disruptions due to having fewer resources and less diversified supply options.

Large: typically have robust, well-developed supply chains with multiple sourcing options, which can mitigate risk of disruptions. Their large-scale operations can handle high volumes and complex logistics but might be less flexible in adapting to sudden changes.

Partnership and Collaboration

Small: are generally more inclined towards building strong, long-term relationships with their clients, often resulting in partnerships that feel more collaborative and tailored to specific needs. Smaller number of customers means the average customer has a greater level of importance.

Large: while also capable of forming long-term partnerships, their approach might be more transactional. They have the capability to engage in large-scale collaborations and can offer extensive resources and support. Larger number of customers means the average has a lower level of importance.

Market Insight and Expertise

Small: often have in-depth knowledge of local or niche markets. Their smaller scale allows them to specialise in specific areas, offering valuable insights and expertise in those sectors.

Large: typically possess a broader market insight, encompassing national and international trends. They have access to extensive data and resources, allowing them to provide a wide range of industry expertise and global market intelligence. But the information and data is only as good as the internal communications.

In summary, small chemical distributors are characterised by their personalised service and flexibility but may have limitations in scale and scope. Large distributors offer a broad range of capabilities, stability in supply chain, and pricing, though may not provide the same level of customisation and personal attention.

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So, there you have it, each has their own unique benefits, and having an understanding of these helps you make better choices. Remember, it’s not just about which is ‘better’ it’s about which is right for you, and the specific project.

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Thanks for reading, and see you next week.

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