Getting Comfortable With E-Commerce

For decades, transactions in the steel industry usually involved some sort of personal relationship, usually face-to-face and over the phone. Issues such as security and privacy were rarely a concern, as each party knew one another. Trust was fostered over many years.

Even with the advent of call centers and the fax machine, most steel buyers had the assurance that the information needed to complete a transaction would not find its way outside the company.

E-commerce challenged these assumptions.

At first, buying things over the Internet was viewed as a risky proposition. After all, the Internet was supposedly unregulated and wrought with computer hackers—like pirates on the open seas—waiting to swashbuckle your personal information or credit card data.

The waters are probably safer than ever. Still, it would be naïve to assume that e-commerce is risk free. Therefore, it is important to understand the underpinnings of privacy, security and payment systems to keep up with e-commerce technology and make sure your transactions are as safe and complete as possible. And once the transaction occurs, what level of customer service should you expect?

Privacy: Who Goes There?

All e-commerce sites require you to provide information either about yourself or your company. How do you know this personal information will be safeguarded?

The first place to look is a Web site's privacy policy. Before submitting any information about yourself, you should read the policy completely. As you read it, ask these questions: who will have access to my information? Can my identity and purchase history be sold to third-party marketers? What steps will be taken to protect my sensitive data?

Many sites also use "cookies," or small data files that the Web site stores on your hard drive, that can save your preferences or track your use of the site. A site's cookie policy should also be explained here.

Privacy policies don't always use the most simple terms and explanations. If you're confused, call or e-mail the operator of the site and ask questions in plain English. More than likely, you will get answers that you understand.

Security: To Protect And Serve

When privacy is the issue, security is an answer. A majority of e-commerce sites go to great lengths to protect their customers' private data. Encryption and third-party verification are two key components to security.

Encryption. While it sounds like a technique right out of a James Bond movie, encryption provides many assurances that enable e-commerce. It allows customers to confirm the identity of merchants and allows merchants to confirm the identity of customers. It also ensures that messages have not been tampered with or read by a third party. And it prevents customers or merchants from denying that they ever received or sent a message.

How does it work? It's complicated—in fact, it's complicated enough to thwart most would-be hackers. Anymore, all Internet browsers and e-commerce providers offer it. In fact, think about conventional transactions where sensitive information is not encrypted . . . credit card purchases at retail stores or restaurants, loan applications and so on. With modern technology, your financial information is probably safer online than off-line!

Third-party verification. Most e-commerce sites use a third-party verification service such as VeriSign to issue server IDs or "digital certificates," the Internet's version of a business license. The trusted third party (certification authority, or CA) issues the server ID only after it scrutinizes a company's background to ensure it is properly representing itself. (This prevents underhanded people from establishing fraudulent sites.) The server ID is shared before and during e-commerce transactions to ensure legitimacy. Look for third-party verification on the e-commerce sites you use.

Payment: Follow The Money

Once privacy and security concerns are addressed, you can feel comfortable buying metals and other materials online. Without paper money or checks, what constitutes legal tender on the Internet? Many options exist; many more are on the drawing board; some have ignominiously failed.

Many consumer e-commerce sites such as Amazon.com take credit cards. Ebay, the Internet auction site, advocates the PayPal or BillPoint services, which debit a buyer's credit card and put the money into the seller's account. Because of their convenience and availability, credit cards have also found utility in business-to-business transactions. But they can become problematic if large or frequent orders exceed credit limits.

Some e-commerce sites require an electronic purchase order, assuming that a pre-established relationship exists. The transaction would proceed conventionally as if the purchase order were mailed or faxed. Still others, such as carpenterdirect.com, offer online open credit terms. Under these arrangements, a click of the mouse and a behind the scenes credit approval allow the user to buy now and pay later.

Customer Service: The E-Sale

In a personal sales relationship, you know whom to call with questions and concerns. But if you order over the Internet, how are you assured of reliable customer service?

Again, the onus is on the buyer to research an e-commerce site's customer service capabilities and policies before the "order" button is clicked. There should be no assumptions. Some established companies offer call-in support during business hours. Other sites encourage you to send comments by e-mail, although it might take hours or days until you get a response. Commitment varies widely.

Before buying metals online, check into the site's customer service practices. Learn what its policies and procedures are. Call the service number to see how quickly your inquiry is answered. Ask if there are other ways to contact the company—phone or fax, for instance—in case your computer is down. Most of all, make sure you can get a human in times of need. Computers are great for doing repetitive things quickly. They are not intuitive problem solvers with the ability to listen, reason and act independently to please customers.

A Key Word—Trust

Trust is an essential component of transactions between any two entities. With conventional transactions, it develops over time and with personal interaction.

However, e-commerce is immediate and can be faceless.

With the usual methods for fostering trust unavailable, e-commerce sites have resorted to technological systems that ensure that people are who they say they are, personal information is protected and safeguarded, and money is transferred fully to and from the correct parties. While no commerce system will ever be fraud-free, today's methods provide an excellent—and trustworthy—foundation for expanding the e-commerce enterprise.

E-lated About E-Commerce

The online experiences of machine shop metal purchasers give ample testimony to the vital nature of today's e-commerce.

When Web-based material purchasing sites such as carpenterdirect.com first appeared a few years ago, e-commerce was being touted as a business revolution. Pundits proclaimed that traditional business models were going to change within months, if not weeks.

Things are quieter now. Some of the dot-coms went under. Their venture capital funding could not buy them one of the things they desperately needed: patience.

For the survivors, overblown e-commerce hype has turned to promising rays of hope. Slowly and steadily, machine shop owners have embraced metal purchasing on the Internet. And once they grasp it, they are reluctant to give it up. They are realizing a variety of business benefits that are truly meaningful.

We interviewed several of the early adopters who have used carpenterdirect and other metals e-commerce sites and learned that they are experiencing rewards that far outweigh—and dispel—even the slightest perceived risks.

Improved Efficiency

Almost all of the interviewed metal buyers noted that buying online improved their efficiency. They reported spending less time on the phone or waiting for a return call or fax.

"I don't like talking to people . . . I don't like dealing with them," says Rick Wagner of San Jose, California-based Sierra Pacific Manufacturing, which makes stainless, aluminum and plastic parts for semiconductor and medical industry. He qualified his response: "I was looking for a way to order materials quickly and easily and this is the way to go. You point and click and it's a done deal. If I can save 5 minutes of my time from writing up a fax or getting on the phone and dealing with someone, then I can be more competitive."

Frank Viola, vice president of manufacturing at Lyntron, a manufacturer of screw machine products, fasteners and electronic hardware in Spokane, Washington, says the automation offered through e-commerce avoids common problems associated with conventional ordering methods.

"I spend a lot less time making phone calls," he said. "And then you have missed calls, phone tag . . . take your pick. Because ordering online is quicker, I'm able to have the person in that position do more things."

George Hanson, Jr., from East Coast Metals, a specialty manufacturer of threaded rods and studs, u-bolts, anchor bolts, hooks, bolts, nuts, washers and socket products in Harleysville, Pennsylvania, concurs, noting also the reduction in paperwork.

"I can place the order right there with a click of the button," he said. "It saves paperwork time. I don't need to find a purchase order, write it up and fax it over. One click and the order is placed. At first, I thought how much quicker could it be, after you turn on the computer, log on, go to the site, and so on. I thought it would be a hindrance rather than a benefit. But the whole process is done in 5 minutes or so."

Get Instant Quotes

Metals e-commerce users also laud the ability to obtain instant quotes. Typically, machine shop owners would call or fax a quote request to a particular individual. Responsiveness would vary dramatically: sometimes a sales representative would be on hand to take a call while other times one would reach voice mail or an uninformed assistant.

Mr. Wagner says he finds that the improved efficiency has helped him serve customers better. "You don't even have to order (the product). If a customer calls and wants me to quote a job, I can have a ballpark quote in my hands while the customer is still on the phone. It allows me to be more responsive to my customers," he says.

Similarly, Robert Hahn with Prince Industries, a manufacturing company specializing in metal and plastic goods located in Carol Stream, Illinois, said the speed and thoroughness of the quoting process were beneficial.

"I purchase metals all day, and with [metal e-commerce sites] you can go from request to order in less than 2 minutes, including the freight cost," he said. "Then I receive an e-mail confirmation of the order within 10-15 minutes. Many times, it's preferable to work online rather than on the phone."

Obtain Product Availability

Along the same lines as instant quotes, online availability of stock is viewed as beneficial. Some e-commerce sites allow users to access information on inventory to check if a particular alloy, size or spec is in stock and ready for delivery. Some customers view it like their own inventory, accessible with a few short keystrokes.

"I can check on very specific items, like stainless 416 and 316 in different shapes and sizes to see if they are available," says Mr. Hahn, adding that it is helpful to know what metals are in stock before he makes the actual purchase.

Chiu Moy, president of Concept Manufacturing, Waltham, Massachusetts, says that the instant inventory verification is comforting, but selection can be limited. "You can't access all of the specialty materials now, like those for aeronautic parts," he says. He offers a wish: "If the site doesn't have the material, it should be able to link to others that do."

Portability/Odd Hours

Everyone in the metal industry knows this isn't a 9-to-5 job. There are no "banker's hours" amid the CNC machines. So it is no surprise that users of e-commerce report that they enjoy having "online stores" that are open whenever they want to order metals.

"I am able to place orders at odd hours, which is good because I don't always think about (purchases) during the day," says Timothy LeVrier, of Texas Quality Manufacturing in Houston. "I've been in the office as late as 9 p.m. and have placed an order. I've ordered metals at 6:30 in the morning when no humans would have been in the sales office," says Mr. Hahn. "Before (e-commerce), I would have been waiting for the guy to open."

In addition to the lack of time restrictions, Mr. Moy welcomes the portability, or ability to move from location to location and still have unfettered access to an online store. "It is convenient . . . I can access it 24 hours a day and get a response right away," he says. "I use it from my office and my home. If I am at home quoting jobs at night, it's helpful to be able to access the information I need."

Ease Of Use

Most of the e-commerce users interviewed for this article remarked that online purchasing was simple. Most of the sites are easy to understand and navigate.

"I suppose there was a little fear factor the first time I tried it," says Mr. Hahn. "I'm no wiz, but I know how to get around on the Internet pretty well. Once I tried it, I saw how easy it was and thought, why screw around anymore?"

Perhaps Mr. Wagner sums it up best: "My 4-year-old could do it. There are some very simple sites out there."

Find Obscure Metals

Finally, many e-commerce customers have noticed wider availability of metals online than with their existing suppliers and that once on an e-commerce site the less common alloy types are simple to locate.

"At first the selection was limited," says Mr. LeVrier. "But now the selection is getting wider for some of the metals, especially some that aren't available locally (on a quick turnaround)."

Search functions have improved also, says Mr. Hahn. "It's easy to find what you want using descriptions of the metal in generic terms, ASTM codes or other codes common in the industry," he says. "Once I find the metal, I enter the size and shape then I'm ready to rock and roll."

E-commerce Is Here To Stay

Currently, online transactions account for only a fraction of all steel sales. If the experiences of those interviewed for this article are an indication, it would seem that the percentage will continue to increase.

When asked what advice he would give those metal shop owners who are skeptical or tentative about using e-commerce, Mr. Viola was direct. "Give it a try!" he says. "People in the screw machine industry have been doing the same things for a long time. They say, we've been doing it this way for years; why should we change? But they need to move up to the 21st century."

E-commerce is not a fad. It's a bona fide trend. It offers purchasers substantial benefits such as efficiency, accessibility, portability, speed and more. In the end, it can significantly improve a company's competitiveness and service—two things that will never be obsolete, no matter where technology takes us.

About the author: Andrew McElwee is vice president–Bar Business Group, Specialty Alloys Operations, Carpenter Technology Corporation in Reading, Pennsylvania. The company can be reached at (877) 893-2100.