Buying Metals On The Internet

The Internet has already changed our world and our industry. It has, however, become less of a revolution and more of an evolution. Resistance on the part of machine shops and suppliers to adopt the Internet meant that many Internet-only companies have been unable to survive. The advantage has now shifted to the so-called “brick and mortar” companies, whose operations have traditionally involved offices, factories, warehouses and distribution centers (often made of bricks and mortar, of course). These companies now view the Internet not as some gold mine, but rather, as an integral part of their marketing and operational plans.

One of the most striking aspects of the Internet is how it has created many new ways for buyers and sellers to reach each other. Many of the barriers that once limited the access of buyers and sellers do not exist on the Internet. It opens a truly global marketplace.

For many metalworking companies, buying metal bars, plates and coils from online sources will be their first experience with Internet purchasing. These experiences are instructive. They show that buying on the Internet takes many forms and offers many benefits. The precautions and concerns that apply to the purchase of metal stock carry over to other Internet transactions. Learning about buying metals on the Internet is a good introduction to e-commerce.

In the area of industrial metal buying, a recent count identified 80 different Web sites. An examination of each individual site type reveals stark differences in style, commerce platform and mission. While each Web site brings its own flavor of e-commerce, they can be broken into a few overall categories:

• Independent Exchanges
• Collaborations of Brick & Mortar Web sites (CoBAMs)
• Corporate Buy Sites
• Buyer-Centric Portals

Independent Exchanges

This type of metals buying Web site advertises itself as an independent company, simply offering a way to deal with disparate metal suppliers. To keep the lights lit, it takes a small percentage of each sale completed online and, generally speaking, uses either auctions (reverse and forward) or negotiation platforms to facilitate metals buying. Leading independent exchanges include the following:

e-STEEL. A highly refined process is used by buyers in this exchange, allowing for open negotiation between buyer and seller. e-STEEL offers buyers the ability to source carbon steel sheet, plate and structural shapes.

MetalSite. Also employing an open negotiation process, MetalSite concentrates on carbon steel flat-rolled products—sheet, strip and coil.

CoBAMs

Collaborations of brick and mortar Web sites (CoBAMs) have sprung up over the past 12 months as a result of the large steel producers’ desires to compete with the independent Web-based sellers. In general, the CoBAMs see independent exchanges inserting themselves between the producers and their customers. These Web sites are an attempt to offer metal buyers a one stop shopping experience, benefiting from the aggregated power of leading U.S. metal suppliers. The most notable of the CoBAMs is MetalSpectrum. This Web site was created through an alliance of companies including Alcoa, Allegheny Technologies, Castle Metals, Chase Brass, Kaiser Aluminum, North American Stainless, Olin Brass, Outokumpu American Brass, Pechiney Rolled Products, Reynolds Aluminum Supply Company, TW Metals, Thyssen North America and Vincent Metal Goods/Atlas Ideal Metals.

The hallmark of MetalSpectrum is its neutrality and flexibility for the metals buyer. The Web site will offer a wide variety of metals including stainless, aluminum, titanium and superalloys.

Corporate Buy Sites

Many brick and mortar companies are going it alone, creating their own Web sites to facilitate direct buying. Among these companies are the following:

Carpenter Technologies—(www.cartech.com) A leading producer of stainless and specialty metals, Carpenter now allows its customers to check stock and place and track orders from its Web site.

Grainger (www.grainger.com) In addition to being able to view Grainger’s full catalog online, customers can also use the Web site to buy shim stock and precision shafting.

FlatGround.Com (www.flatground.com) This Web site allows buyers instant access to inventories of O1, A2, D2, S7 and low Carbon steel in both standard and oversize tolerances in standard lengths.

Buyer-Centric Portals

A long-standing Web site format is the buyer’s portal. These Web sites are designed to provide rich information on a single industry, making themselves an important resource for metals buyers. One example is:

Metal Suppliers Online (www.metalsuppliersonline.com) Buyers at this Web site can search the inventories of more than 2,700 metal suppliers, create RFQs, negotiate and place their orders online or off-line. Additionally, this site offers machining, welding and forming data covering roughly 17,000 grades of metal; specification lookups; trade name cross references; and calculation utilities. Because it lists the inventory of nearly every major metal supplier in the country, there are no more “hard-to-find” metals.

Metal Buyers’ Concerns

Any discussion of Internet-based commerce would be lacking without a mention of the two issues of highest concern to buyers today—security and privacy.

Regarding privacy, most major Web sites utilize a technology known as “cookies,” small files inserted into your computer to allow a company to track and record your activities within that Web site.

In the right hands, information gathered using cookies could be used to optimize your experience within a Web site based on your interests. Understand, however, that this information might be used to “profile” you and may, depending on policy, be sold to third parties.

It’s extremely important for you to address this issue. While you do have the option of turning off cookies, when you do so, many Web sites will deny access. This decision needs to be a made on a case-by-case basis. Be sure to read and understand the Web site’s corporate privacy policy. If a Web site does not publish its policy online, question the motivation and understand the implications of that decision by the Web site owner.

On the topic of security, two major areas for possible concern frequently arise. The first is the security of using a credit card in making online purchases. The second is the security of the data in your company network.

Regarding credit card security, always look for a secure Web site when you use your card online. You will know that the Web site is secure if you see a small yellow lock icon in the lower right corner of your Internet browser. If the lock icon is open, the site is NOT secure. Only when the lock icon is closed and therefore secure should you punch in your credit card data. In any case, you should be relatively confident in using your credit card to make online purchases, because the protections against card theft or abuse apply online as well as off-line.

A separate and extremely more important issue stems from a hacker’s ability to access your internal network through your Internet connection. If you have a high speed Internet access line, such as a DSL, ISDN or T1, you are essentially adding your company to a worldwide network of computers: a network that MIGHT be accessible to some very unfriendly people. This warning does not mean that employees shouldn’t be provided with high speed net access. It DOES mean that you had better work with your information technology manager, or hire an independent consultant, to establish security with a “firewall.”

A firewall is simply a password-protected barrier between a private internal network and the outside world. Like a traditional firewall, it ensures that company data is protected from damage and theft. Installing Internet security measures is just as important as installing an alarm system in a home or office. A hacker can do a tremendous amount of damage in a very short time. These risks are not to be ignored.

Another critical issue is the danger of Internet-borne computer viruses. The absolute best defense against this hazard is a policy against opening any e-mail attachment unless the receiver is absolutely sure of who the sender is and that the attachment in question is NOT an executable (.exe) file. This type of file is a program containing commands that initiate certain actions within the computer. While some executable files are harmless, others start a routine designed to destroy the receiver’s hard drive or wreak havoc with the victim’s computer and/or network.

A Tool

The Internet is best seen as a tool. Like any tool, it has great potential to magnify human effort and creativity. It offers a more efficient way to research, buy and sell products, saving time and money in the process. However, it does carry some risks and hazards. The greatest mistake, though, would be to ignore the Internet or underestimate its power.

About the author: Alan Gamble is the founder and chief executive officer of Metal Suppliers Online. He can be reached at (603) 382-9835 or by e-mail at info@metalsuppliersonline.com