The future of steel and metals turns virtual
In the early 1980s, the construction industry was beginning to see a spurt in growth. Apartment complexes, office complexes, stores that were several stories high were becoming a common sight in India’s metros.
During this same period, when Chandra Mohan Babu’s father used to buy steel for his newly established construction business he would first place a trunk-call to speak to the steel supplier who lived in another state. Sometimes, he would get through the first time and sometimes he would call 16 or 17 times before he could get through. Subsequently, would begin the process of selecting the right grade of steel for the specific type of construction, fixing the exact quantities required, and filling up request forms, price negotiation, and several other processes. After this, the details would be faxed to the supplier who would need time to revert and finally, the order would be placed.
The waiting period could run into several weeks or even months before he would receive the shipment. Sometimes, the shipment would be as per the order, but at other times, it wouldn’t be what he expected. Returns, refunds and a fresh order could be a laborious process in those days. All of this added to the overall cost of the building.
Today, the process for buying construction steel is entirely different. The industry is a lot more evolved. Digitisation of the industry has changed the industry by almost 360 degrees. Sellers and buyers of steel no longer need to connect before placing an order.
Increasing buyer traffic on online steel platforms
Online digital platforms have replaced physical market places and Chandra Mohan can select any steel product of any grade, for any purpose, from a wide range of reputed steel sellers. He can check the current price of steel and place an order, sitting in the comfort of his house, or office, using just a mobile phone app.
He can buy different steel products from platforms like Steeloncall which specialises only in buying and selling steel products. The Steeloncall platform, and a few other reputed online steel trading platforms like it work on a simple model. Steel manufacturers and suppliers are first verified before they are onboarded. Their products are checked for the manufacturing process and quality certified. The products are listed, by type, grade, size, price and the available quantities of each are mentioned upfront.
Like any other online purchase online, buyers can choose what they want from the platform’s large inventory and make the purchase decision, specifying the delivery address to which they want the product shipped.
Steel is an expensive metal, so platforms like Steeloncall have tied up with banks and other financial institutions to give buyers convenient finance options.
Once the purchase is made, the platform confirms the delivery date and buyers like Chandra Mohan can plan their schedule for construction. This gives the buyer a lot of autonomy. He can concentrate on activities that add more value. Products once bought can be returned or exchanged and this process can be completed in no time, with no hassle. There’s no endless waiting and no loss of money and the procurement of steel for construction is simple and fast.
Online steel trade, from a seller’s perspective is also encouraging. Though there has been vast cultural upheaval in the industry with digitisation of the market, steel traders are beginning to recognise the advantages of being present in the online marketplace.
Sellers see a bright future for online sales
For starters, online sellers do not need to pay hefty rents to stock materials in a store, nor do they have to spend too much money to establish their online credentials. In fact, steel manufacturers themselves have recognized the opportunities offered by direct online trading, and many of them operate web shops of their own, on their websites.
To have an online presence on a platform, manufacturers and sellers of steel do not have to make large financial investments. They can simply enlist the vendor support service for verification, certification and onboarding. The platform will categorise and sort products, create an online profile for the brand, link the purchase order to the payment gateway and ensure the money is credited into the seller’s account.
Reputed platforms have built close bonds with banks and financial institutions to help buyers. The resultant effect of this buyer-aided finance directly benefits the seller whose stock goes off the shelf.
Another benefit is the access to scores of customers, from across geographies – an advantage that a regular steel trader sitting in a physical store in one corner of the country doesn’t have. Each day and night, several buyers browse through the online store to procure steel bars and flats or any other steel product. As the digital store is not located in any specific town or city, the store is open 24 x 7 and orders can be placed any time of the day or night.
The evolved, digitized value chain offers better customer interaction and up to a two-fold increase in service levels, 2-4% improvement in earnings before interest, taxes, depreciation, and amortization, and inventory reductions of 10 days and more, according to a World Economic Forum report.
The built-in Ai and predictive analysis features of the platform allows brands to collect data of several customers and predict browsing/ buying patterns, thereby generating favourable results in months or even weeks. The platform enables a demand forecast based on a detailed understanding of customer needs and demand drivers – to allow companies to reduce inventory and improve margins while delivering better service. What is more, several companies are known to have generated a positive ROI in their first year.
While the online market for buying construction steel, fabrication steel and specialised steel is still young, there is no doubt as to where it is headed. Without any doubt, early movers will be able to establish a pioneer’s reputation and thereby, a clear competitive advantage. Late comers will be taking a big chance on their future.