The chemical industry underwent a rude awakening in the post-pandemic world. Having an e-commerce solution to meet the customers’ needs is no longer “nice to have”; it’s a must-have! But selling chemicals online is not as simple as selling books or frying pans on Amazon because chemicals require specific regulations, storage, and transportation. How do you get around this dilemma? Today’s guest is Jay Bhatia, founder and CEO of Agilis Chemicals Inc., a highly successful e-commerce platform for the chemical industry. Jay discusses with Victoria Meyer how you can conform your digital channels to reflect existing trade patterns in the chemical industry. Tune in and learn how!
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Building An E-commerce Solution For The Chemical Industry With Jay Bhatia
I'm talking with Jay Bhatia who is the Founder and CEO of Agilis Chemicals, which is a technology startup based in Newark, New Jersey. Jay founded this company after a long career at major chemical companies, including BASF and Shell. He brings a lot of his unique insights of the industry into Agilis. Agilis is a digital commerce solution provider to the chemical industry and it’s making an impact. I'm delighted to have Jay here to talk with us. Welcome to the show.
Victoria, thank you for inviting me. I wish I could meet you in person in Houston, the city where I spent the early part of my career. I love the city.
Absolutely, one of these days when travel starts becoming more available and ready and we're past the COVID pandemic. Jay, I'm so excited to have you here. Throughout my career in my corporate life, I worked in eCommerce and eBusiness in the chemical industry. When I started doing eBusiness in the chemical industry, companies had a certain approach and attitude towards it. Here we are fast forward to 2021, what's different about eCommerce solutions in the chemical industry?
A lot is different. The technology has matured. The awareness and the use of digital technology in daily lives increased significantly. We all use digital platforms in our daily lives as if we were born with them. That is the number one difference. Coming down to the chemical industry, the key difference many years back is the early players had a very simplistic view of applying digital technology to this massive complex industry. Surprisingly, some of them still do. Some of the players also think that this will be like Amazon just because you can buy a product at 2:00 in the morning that you should be able to buy chemicals as well. That approach hasn't worked and will not work. Overall, digital technology exists to solve some of the toughest and complex challenges the industry has. It requires a combination of in-depth knowledge of how the industry operates as well as the expertise and understanding of how technology can be applied to solve these problems.
Is the industry ripe to take these solutions? It has not always been ready to apply a digital solution. Is it ready now?
The industry doesn't have a choice. If you look at the Baby Boomers retiring, the industry is looking at a demographic avalanche heading their way. More than 50% of the workforce is set to retire in the next 5 to 7 years. The Millennials and digital natives who grew up with digital technology are already in the driver's seat. This is not whether the industry can build its model for when and how fast. If you look at a lot of other oil industries, those are transforming at a much greater pace than chemical industries. On top of it, if you look at the global pandemic situation that we ran through or still going through, it has been a rude awakening. In the post-pandemic world, having a digital commerce channel is no longer a nice-to-have or optional. It's a must-have. It's a necessity to engage customers digitally. The industry needs to adopt digital technology. There is a much greater sense of urgency that we see than before.
Do you see that sense of urgency coming at the executive level? You mentioned that the younger workforce coming in place wants digital as part of their everyday life. Do you see that at the executive level? Are they ready to adopt and fund it?
Yes, there is a push coming from the executive level, but the execution happens at the operational level. A lot gets lost in translation like many other projects. We see a varying degree of digital adoption depending on the company and its digital maturity stage. These initiatives work well on levels and there is that buy-in from the top-level.
Let's talk a little bit about Agilis. What inspired you to launch Agilis Chemicals?
Digital technology exists to solve some of the toughest and complex challenges the industry has.
During my two decades in the chemical industry, I have worked on three different continents in Asia, Middle East and the US. For most of my career, I have been always engaged with Europe. I have worked with a few big and small companies. Interestingly, wherever I went, I saw the same challenges. There were a lot of manual processes and use of spreadsheets and emails even for the most routine business task. The way of doing business in the chemical industry has hardly changed. At the same time, through my network in the software industry, I know that a lot of oil industries are transforming themselves with the help of digital technology.
I thought, "I spent nearly half or more of my career with all these frustrations. I owe it to fellow professionals in this industry to make their work-life matter by building technology solutions that meet their needs." I also know being inside the industry that half of the self-solutions do not work for this industry. You have to take a more nuanced approach. Rather than forcing digital business models on doing that work in the consumer industry or into this industry, let’s build something tailor-made for this industry. That's what we are doing. We have built a platform ground up catering to the chemical buyers' and chemical suppliers' needs.
Can you give us an example of what's different about what the chemical industry needs in this type of platform versus what we might see in a B2C environment or something that you guys are applying?
Everything is different. First of all, chemicals are technical products. There are a lot of nuances. This is not like buying a book or frying pan from Amazon. There's a lot that goes into making a decision about what product to buy. There are even multiple steps in qualifying the product before buying. It starts from there. Plus, there are ingrained value-chain relationships in the industry. For example, the distributors play a very critical role in the industry. They might up and down the value chain. How do you conform to your digital channels to reflect the existing workflows or trade patterns of the industry? It's an industry that has regulated hazardous chemicals that requires storage and transportation in a specific way. We firmly believe that the best approach is to adopt digital technology to the way business is already being done in the industry rather than force-feed digital solutions.
You're building a platform that meets the processes and requirements as opposed to trying to change the business profit.
Minimum disruption is our mantra. If we can adopt a digital channel with minimum disruption to these massive established businesses, then that is something that resonates with both producers, distributors and customers. That's what we are up to.
That's interesting because the chemical industry has been a very relationship-driven business. Part of it perhaps is because of the complexity of it. It's because as large as it is, it's also in some ways a small universe. As you said, some of the complexities in all the processes had driven it to be a very relationship-oriented business, whether it be externally focused or inside the companies. Has that been a challenge or barrier in terms of the relationship orientation? Has that made it harder to adopt a digital solution?
It's a barrier in the sense of the limited understanding of how the technology works. It's no secret that relationship is a critical element in any enterprise, not just chemicals but more so in chemicals because of the complexity, nuances and the way the value chain functions now. However, technology does not come in the way of relationships. We say from the rooftops that having a digital channel does not mean that you are eliminating human contact. On the contrary, you're making that human contact more important and strategic. Let the computers and software do the routine, mundane task so that your dialogue with your customer becomes more strategic. You can deploy your human capital in a more strategic and thoughtful way than having them do the mundane tasks, which can be taken care of by technology.
You've got some big-name companies that are working with you. I know you've talked publicly about BASF and Vinmar being a couple of your key customers and users with Agilis. Give me an example of either one of those. Why did they choose Agilis? How did they get started on the platform quickly or how did they see the value?
We've been fortunate to get some of the big names on our platform. Keep in mind that we are not a marketplace. We don't announce every customer who signs up. We build the solution for that specific customer. We put out in the public domain only those who want to be. Established companies recognize that this is not a place where you can take up the self-solution or an Amazon-type approach, and then sell the digital channel or implement it in the existing business. When they heard about our nuanced approach and how we help build the platform that reflects our thought process, that is the winner. We have proven that. Like with BASF, we launched their branded digital portal within less than eight weeks.
That's fast because most implementations seem like they take at least six months or a year or more.
That is because we have built the platform that already takes into account the way the product database will be structured and workflows will be established, and a lot of nuances that companies generally take months in planning and execution. Not only that we launched, within the first year we had already sold significant business growth of more than 50% growth in sales and significant customer adoption of more than 99%. Existing customers have adopted the digital channel. This is out in the public domain. We are very happy about the partnership. That is leading to having more product lines and more business going online. Not only with BASF, but all of our digital customers have also seen the value. I am happy to say that we have 100% customer retention. Each of our customers is entering into phase 2 and 3 of implementation.
That's impressive, especially for a young company. You guys have moved quickly. You made a distinction between a marketplace versus a commerce platform. If I was doing business with one of your companies, would I know it is on the Agilis platform or is it unique to the individual company?
It is unique to the individual company. However, the way digital technology operates is that everyone thinks that you need to be part of the marketplace to be visible. Google is the largest marketplace. If you figured out a way to get on the top of the Google search, you have a winner. I would argue how many end-users will go to a specific platform to find a chemical, they go to Google first. We have technology tools that enable our customers' portals to be visible within the first page or even the top five searches. We leverage SEO technology. There is a network effect of buyers coming to the portal and then distributors and producers pulling in. Plus, we have partnerships with some of the leading networks. We are very proud of our partners with Underwriters Laboratories, which is the largest network of buyers in the chemical industry when it comes to discovering new products.
I would not have expected Underwriters Laboratories to be big in the chemical business.
They have a UL Prospector platform, which is the largest platform used by suppliers and end-users. In a way, we are plugging in that marketplace name. The producer portals on our platform are integrated with UL Prospector so they automatically get access to the world's largest network of buyers. At the same time, they can preserve their brand and curate the customer experience.
You talked about customers being able to find the suppliers, yet a lot of the products that are handled across the chemical industry have health and safety considerations. There's the whole buyer considerations. Many times, chemical companies do not just want customer to show up and try to buy their product without having been vetted and approved and understanding the supply chain. I'm guessing there's a process along the way that allows for that.
We first configured the supply chain before we put the product online. When we are working with our suppliers, we first built a workflow that allows them to configure who is going to sell the customer right to the point from which shipping point if it is possible. The physical linkages happen before the product goes digital. That’s what makes it more effective because then the buyers have a certainty that if they're going to click for requesting a transaction, it's going to happen.
You need to be a part of the marketplace to be visible.
There’s certainty on both ends. Digitalization is one of the key trends in the industry. We're seeing it from a workforce behavior perspective as we've all gone up to fully digital it seems like. Many of us have gone digital in the sense of working from home, working remotely and using new tools. You're bringing a new solution to the industry. How is this evolving? What's the next step? Is there still a lot of adoption that needs to occur? Are people ready to take the next step?
It is in varying degree, depending on the organization. In general, the awareness and willingness are improving significantly every month. Specifically, after the pandemic, it is on the agenda for every company. However, what happens is that your daily priorities get in the way or events like the Texas freeze that happened, and then the whole industry gets distracted. If you can't get the product to customers, nothing else matters. Apart from that noise or some distracting events, there is an increasing trend for digital adoption in general. As it has happened in many other industries, digital is here to stay. It is a matter of time and speed. At the same time, there is not going to be a magical solution like Amazon that will transform the whole industry. The players who provide solutions that meet customer's and suppliers' needs better are the ones who would be successful.
Do you see regional differences in the interest in Agilis or digital adoption in the chemical industry? Is there are regional differentiation?
Yes. It's very interesting that although internet technology has originated from the US, the adoption is much higher in Asia and Europe. If you look at China, people are already doing digital commerce and even placing orders on WhatsApp and WeChat for years. Even in Europe, by and large, European producers are much further ahead than US producers and distributors. We are a US company. We are focused more on the US, but at the same time, we see that a lot more are coming from Europe and Asia.
Is everything driving to be more mobile app-oriented?
Yes, but not just app-based. It’s like, how do you track your shipment? How do you make a payment? I'll give you an example. I was talking to my colleague in Europe. He's based in Brussels. In a tiny country like the Netherlands, nobody writes checks, neither in personal life nor even in businesses. Over here, we still have businesses that write checks. There are regional differences and then you got to adapt to that. This is a huge industry and there are a lot of nuances. Integration with the legacy system is another key part that you don't want your solution to be standalone. That's why we partnered with SAP, Salesforce and Microsoft. Those partnerships are also helping us in getting more attention and building a solution that works for the long-term and not just for a short pilot.
Once it's installed, you want it to keep running and breathing for a long time.
Since you've been on this journey with Agilis for a few years, what was your biggest hurdle? What has been your biggest learning?
Starting a new venture or launching a new way of doing business, product or platform in an established industry is always tough. It is like launching a rocket ship. The maximum energy gets consumed in the initial phase. There’s tremendous learning. Some of the challenges that we have faced and we still do to an extent is the industry has a huge inertia preference for the status quo. Let's face it, it is one of the most conservative industries. How do you create that sense of urgency when the cost of doing nothing is nothing, at least on the face of it? On the contrary, you can say that the cost of doing something could be perceived as a risk. In that environment, driving that sense of urgency is the biggest challenge.
The second challenge we are overcoming is the business of chemistry is complex. There are established value-chain relationships and upstream and downstream trade flow patterns. Adopting digital technology to the way of doing business in chemicals is an interesting challenge. They are the ones that we have got much more in control than things that we cannot control. In a startup world, you learn almost every day. Even when I look back, it is so different from the corporate life that I have had with BASF and Shell.
Inside of a company, where does the interest start? Is this driven by a commercial leader? Does it tend to be driven by a technology leader or people looking for your commercial strategy for implementing? Is it a technology strategy that brings into your door?
It’s both. A lot of the corporate initiative starts with the IT organizations, and then a lot of the business problem-solving part starts with the business leaders. Our focus is more on business leaders and then helping the businesses to solve their specific problems. Although the platform solution is the same, with each customer, the business objective is different. Someone wants to grow sales into some of the untapped market segments. Other customers want to make things easier for a customer to do business with them, and then yet another customer would want to digitalize internal sales processes before they go external. We focus on the projects that can be implemented fast and then we can see the results fast.
What do you see 2021 is holding out for you?
With the pandemic, there was a lot of demand. The pandemic created a rude awakening for the industry on the importance of having digital tools and channels. However, not many companies had the bandwidth to start a new project when everyone is working from home and just focused on driving the current business. I would say that in 2021, businesses are coming out like a slingshot. There is so much to do with the opportunity, which is great. Also, the market demands are at a peak and then there were supply chain issues. Those were also distracting businesses. We have lots of interesting engagements with the customers, but projects did get delayed when the Texas freeze happened. We are still seeing a pretty strong year not just for digital adoption, but even for the industry in general. There is a growth forecast of 4.5%-plus in the chemical industry. 2021 and 2022 are looking to be great years.
Jay, I enjoyed speaking with you. If people want to learn more about Agilis or get in touch with you, what's the best way to do so?
To learn more about Agilis, visit our website, AgilisChemicals.com. To get in touch with me, LinkedIn is the best source. I'm on LinkedIn. Send me a connection request and I would love to chat with anyone in the industry.
Jay, thanks so much. I enjoyed our conversation. I appreciate you talking with us on The Chemical Show.
About Jay Bhatia
Jay is a Founder and CEO of Agilis Chemicals Inc., a technology startup based in Newark, NJ. He founded Agilis in January 2017 after an illustrious career with BASF and Shell where he led sales
and marketing organizations. He also led an implementation of internal startup at BASF.
Jay is passionate about using technology to solve business problems. At Agilis, he is leveraging his 20 years of experience in the global chemical industry to solve chemical industry’s most persistent challenge: lack of efficiency and transparency resulting from highly complex and fragmented supply chains. Over past 4 years, he has led a cross-functional team to launch a commerce platform purpose-built for the chemical industry. Agilis platform brings producers, distributors and customers onto a single interface, driving transparency, efficiency, and growth.