By Jim Knott
People around the world are harnessing the power of the online marketplace. From airline tickets to advanced electronics, tungsten to tires, the Internet is a shopper's paradise -- a 24-hour buying frenzy featuring reduced costs and increased efficiencies.
While many in the consumer marketplace such as Amazon.com and eBay have pioneered and capitalized on this new medium, business-to-business e-commerce is now poised to make a similar dramatic impact on the commercial marketplace and the metals industry. Expediting the buying and selling process, increased control of surpluses, ease of transactions and more choice of product and suppliers are just a few of the advantages of a business-to-business online metals community. e-commerce is not just a tool of the new economy its a tool of the real economy.
The Online Advantage
As the pace of e-commerce continues to increase at warp speed, the wire industry will be led by those companies that can deliver, supply and market product faster than their competitors. e-commerce, with its unlimited potential for communication, information and speed, is the answer. Developing a business-to-business sales chain, however, is a complex process that requires time much more than business-to-consumer transactions.
Most wire production is highly customized, requiring detailed communications between producers and purchasers -- much more interaction than a catalog-based purchase or the consumer market. In addition, the needs of just-in-time delivery and the question of price versus quality add further complexity to the process. Despite these inherent problems, many business-to-business e-commerce communities such as MetalSite have developed successful technologies to navigate these complexities. Now a viable, sophisticated and proven new medium exists for business-to-business transactions and it will be coming soon to the wire and rod sectors of our industry.
A study by the investment bank Dresdner Kleinwort and Benson estimates that companies using e-commerce venues could slash procurement costs by 10 percent an almost incalculable saving. Such business-to-business efforts, according to a Goldman, Sachs and Co. economic study, will boost the long-term annual economic growth of industrialized nations by .25 percent.
Indeed, it is no surprise that most experts agree business-to-business e-commerce is poised for a period of hyper-growth throughout the world. In Germany alone, total Internet transactions are expected to reach 68.5 billion marks by 2004. In fact, e-commerce's share of the total business-to-business market is expected to double or triple in each of the next several years, reaching nearly 10 percent of the total market -- or $1.7 trillion (US) -- by 2003.
The wire industry through the development of commerce communities stands to greatly benefit from this e-commerce explosion. An e-commerce community brings all parties of the industry together in a single online marketplace providing a one-stop source for information while facilitating the buying or selling of wire products. Unlike online auction houses and distributors, commerce communities provide full-service solutions to specific industries.
Today, online steel communities such as MetalSite.net, provide greater sales flexibility and synergies for participants. MetalSite allows suppliers and buyers to participate in auctions, standard pricing sales, online negotiations or to initiate a request for quote. In essence, participants can do business the same way they did with a telephone and fax machine only faster, cheaper and with access to more customers throughout the world.
According to the investment firm of Morgan Stanley Dean Witter, 50 percent of the steel spot market sales in the U.S., Japan and Europe may be sold through the Internet by 2001 a total of more than 79 million tons of steel. The firm also asserted that companies moving quickly to integrate Internet technology with their business will expand their customer base, increase average price realizations by at least $50 per ton and achieve 5 percent savings in operating cost.
Steel industry executives must be listening. For example, since MetalSite facilitated its first transaction in 1998, more than 50 sellers and 19,000 users have registered to participate in its services. As the Internet becomes even more integrated into typical business functions, it wont be long until business-to-business e-commerce transactions are the method of choice within the wire industry.
10 Tips for Selecting an e-commerce Partner
Choosing the right e-commerce partner is a crucial decision. Switching partners can be very costly once a relationship is established and a history of electronic records is built. Like any business investment, take the time to research and identify a partner that best fits your needs. Here are ten items commonly cited as important factors for choosing an e-commerce provider.
Considering the benefits of e-commerce, in terms of reduced business costs, increased competitiveness and time efficiencies, the effort made to evaluate and join the e-commerce revolution could be one of the smartest investments your company will make this year.
, Knott & Company, Inc.
546 Hill Street, Whitinsville, MA 01588-1019, USA
Tel: 508.234.4710, Fax: 508.519.6333, Email: email@example.com