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AlloyTech : E-Commerce : E-Commerce & The Metals Industry

E-commerce and its Impact on the Metals Service Center Industry

This year, E-commerce will account for roughly $6.1 billion in sales. By the year 2000, it is estimated that this number will exceed $20 billion. As impressive as these numbers are and as excited as Wall Street is about the future of this type of business, a more careful analysis reveals some interesting facts.

The companies that are now doing big business on the Internet are primarily retail catalog businesses. For companies like LL Bean, J Crew, Tower Records and CD Now, the Internet is simply another way to leverage their existing marketing plans. All of these organizations are retail merchants that already publish their prices and outside of fast delivery, provide little or no value-added service.

By comparison, the metals service center industry lives and dies by value-added service and no one that we know of currently publishes their pricing. Add to this the inherently conservative nature of our business and I think that it's fair to say that the promise of E-commerce for our industry is still a few years away.

Accepting this reality, we feel that many in the industry might opt to back away from the Internet in general but this would be a mistake. While the market may not be ready for full-blown commerce on the Internet, there is a strong argument to be made for the development and maintenance of a professional and functional website. Further, a Sales Assisted Simulated E-commerce system can be put in place today that will provide the functionality, (without the expense of a full Enterprise server) all the while keeping a live salesperson in the loop.