Online steel marketplace Steel Valet has high hopes and big dreams, months after its launch in late 2016, despite a steel e-commerce industry replete with high hurdles and a troubled history.
The e-commerce platform, geared primarily to secondary and excess steel, launched in early December, and is determined to revolutionize the archaic communications of the steel industry, company principals told AMM then.
Now, in early February, the platform hosted at steelvalet.com boasts around 200 active members, Steel Valet president Eric Bellisario told AMM.
Bellisario himself cut back a bit on work at his North York, Ontario-based SteelBase Ltd. steel distribution company, an early guinea pig for the site, in late November.
Although he still owns and operates SteelBase, he opted to join Steel Valet full-time, a measure of his personal conviction in the project, joining three other employees at Steel Valet, who include web designers and marketers.
Bellisario has also poured some of his own money into Steel Valet, though he declined to disclose how much, he said during an interview at AMMs headquarters in December.
In the past, many companies, including established steel service centers and producers, have made a go at metals e-commerce, with mixed success.
AMM rhas eported on several e-commerce platforms launched in the early 2000s, when metal companies, like others, rode a wave of dot.com euphoria, only to burst their own bubbles within months or years.
Those years saw waves of launches, closures and speculative last-ditch investments in websites with names like MetalSuppliersOnline, MetalSpectrum, MetalSite, e-steel, or SteelPartner.com, all part of a massive shakeout in the steel online space.
But the time is ripe to try again, Bellisario said in an interview in New York.
Back then, including in the late 1990s when the hype started, I dont think the industry was ready for it, Bellisario said, a decades-long steel veteran. Surprisingly, steel still remains an archaic industry to a certain degree.
But as people are ever more versed with technology, and particularly as millennials graduate into the industry, acceptance of steel e-commerce will gain, Bellisario maintained.
These millennials, and others of this new generation, 16 years down the line, will search any and every avenue they can for a networking opportunity, or a competitive edge over rivals, which Steel Valet can provide, he continued.
Steel Valets site certainly looks modern, with all the functionality youd expect of a contemporary e-commerce site built in 2016, the year the platform was developed by Toronto-based marketer Richmond Day.
A sleek black-and-yellow dashboard allows users to sell steel, bid on product and communicate with other users, in intuitive ways, AMM found in its exploration of the site. News items and market research are compiled up-to-the-minute to keep industry veterans informed.
Steel Valets facility directory lists 189 companies, as of Feb. 9, from service centers to manufacturers and processors, sprinkled with well-known names like Samuel Son & Co., Olympic Steel Inc. and Kloeckner Metals, AMMs review of the site showed.
Still, steel producers are few and far between on the site, at least so far.
Thats partly because Steel Valet targets the so-called secondary market, also known variously as the excess or surplus market, a little-publicized but sizable portion of North Americas rough-and-tumble 134.5-million-tonne-per-year steel industry.
These steel products can be dubbed obsolete, exotic, or canceled, depending on the specific situation and who you talk to, and what labels they favor, Bellisario noted.
The secondary market can be up to 10 percent of U.S. mill production, discounted or otherwise discarded for a big body of reasons, he estimated.
That market can double at the service center level, Bellisario reasoned, though he had no official data.
At service centers, its not necessarily that it is all secondary material, but that it just gets classified that way, because of minor errors, wrong placement of orderssimply, its not going to get used for its original, very specific intended end-use, he told AMM.
Because of its focus on the secondary market, Steel Valet has been cautious about approaching major North American mills to join its platform, as its obviously a sensitive subject, according to Bellisario.
Now, steel mills often auction off their defective secondary material on their own corporate websites, so one idea is to incorporate the existing auction platforms of steelmakers and reroute that through Steel Valet, one option Bellisario is examining.
Its not obvious, though, why steel mills would buy into the concept at all, or join Steel Valet specifically, which is still a relatively young start-up.
As early as the late 1990s, major steel companies had adopted their own in-house e-commerce systems, with successful projects at then-EMJ Metals Inc., Ryerson Tull Inc. and U.S. Steel LLCs Straightline.
Even though Steel Valet can easily accommodate deals in prime or non-excess steel, Bellisario frankly acknowledges the obstacles. His goal is to entice mill participation by first building up service center membership. Then, sufficient traffic and user transactions should help bring mills on board, at least as an extra outlet for their existing secondary material, he said.
Prime has always been a market where its relationship-based, one-on-one, private discussion and private engagement, in structuring prices and deals, Bellisario told AMM in December. This platform is more to deliver access, for people that may not have been privy to getting that (price and product) list, that the mill sends out.
Searching Steel Valets listings sheds light on interesting features.
Steel prices and specifications, for example, are displayed openly from steel suppliers in a searchable format, with information on tonnage, price and delivery sites openly shared and shown.
The platform showed 63 active listings as of Feb. 9, from service centers including Grand Steel Products Inc., on tube, bar and plate, and hot-rolled coil, both galvanized and black, AMMs review showed.
Chemical content of elements from carbon and manganese through to silicon and chromium can be specified to the last 0.01 percentage point, while the site also boasts a handy gauge chart for materials from carbon and stainless steel to aluminum, showing that it spans the metal spectrum.
Steel Valets focus is squarely on facilitating actual transactions, and not merely turning into yet another social media and networking tool, Bellisario emphasized. Enough social networks exist, he noted.
If we wanted another social network, we wouldve just joined a group on LinkedIn, Bellisario said bluntly, noting that Steel Valet absolutely does not want to become mere steel social networking.
Were looking at creating a network of lot of people who actually transact, he continued.
Its great that you got 500 followers, or 500 people that youre now in contact with, but how much transactions have you actually done with these people? he questioned.
The missing link in many networking tools is that they dont allow people to transact or do real business, he said.
Its allowing them to post birthday pictures, photos of family functions, and to comment on stuff, which is not what we want, Bellisario said. We want people to use it for the scope of business.
To that end, Steel Valet is developing useful features, which ease commercial transactions, like partnerships with trucking companies and credit companies, for freight arrangements and instant credit checks on customers, Bellisario told AMM in a subsequent phone interview in February.
As for objectives, Steel Valet has a soft target of enlisting 5,000 users within five years, a preliminary target it believes is attainable. As for the volume and value of transactions done via Steel Valet, that will be determined more so by market conditions and availability of steel material, Bellisario said.
Bellisario could face some tough competition, however.
In particular, Steel Spider is another popular site for steel e-commerce, specifically in secondary, one service center executive said, whose company is a Steel Valet member.
His companys team on secondary steel has more typically used Steel Spider, hosted at steelspider.com, though this executive doesnt have any complaints or issues with Steel Valet so far, he told AMM in early February.
Steel Spiders got a head-start in those online sectors, he said. Its got a business model, its got advertisers, its got end-users.
Steel Spider has more than 1,600 entities listed in its facility directory, according to the companys website. The company, owned by Mountain Hawk Corp., charges steel suppliers a fixed monthly fee but does not charge buyers and earns revenue through listing fees, lead referral fees and advertising fees, its website says.
In metals e-commerce, one needs some money and some credibility behind you, continued the service center executive. He characterized metals e-commerce as a tough business to succeed in.
Still, this North American service executive, who is familiar with Bellisario and his other companies, described Bellisario positively as an entrepreneurial steel industry veteran, with significant and diverse business experience.
Its the old world of e-steel, this executive said, in his first immediate gut reaction to a mention of Steel Valet, which his company has trialed in recent weeks.
No doubt theres room for an online presence in the world of excess steel, but its early days, he said of Steel Valet.
This executive remembers the late 1990s and the early 2000s, mentioning that eSteel was probably the biggest commercial portal. Investors sunk an awful lot of money into that venture, he said.
If one of the big guys, like e-Bay or Amazon, decides to get in this stuff, it could be big, the service center executive said. There could be a marketplace. But, so far, this never seems to take hold in the metals service center industry.
A second longtime steel distributor, who sells to construction markets, voiced similar skepticism about steel e-commerce, though he wasnt familiar with Steel Valet specifically.
I dont think steel e-commerce is going to work out easily, the second distributor said. Everyone knows everyone directly in the steel business. They dont want to put another layer of profit-taking in there (via an intermediary e-commerce platform).
Ive got people calling me this morning, right now, and they still need material today, or yesterday: they dont need (layers of) e-commerce. ... How can you get quicker than an email? With e-commerce, youve got to post it, youve got to proofread it.
I dont see how e-commerce is going to speed up business any faster than the current method, he continued, though he noted that hes no more tech-savvy than the average steel market participant.
Mills that he deals with wont put out pricing on public websites, too, for anyone to view or compete against, he added, noting that prices for prime material are pretty confidential, especially for the biggest and most important steel customers by volume.
Nonetheless, some industry veterans, particularly who work in the secondary steel market, are more optimistic.
E-commerce platforms are not my favorite form of transaction, but compared to the early 2000s the whole world now operates this way, according to Lisa Goldenberg, president of Fort Washington, Pa.-based distributor Delaware Steel Co. of Pennsylvania. It might be ripe for a chance.
Belliarsio had a stern message for skeptics of the benefits of e-commerce generally, in metals.
Its probably time to get into the 21st century, he said, speaking to market participants still wedded to fax, phones and in-person handshake meetings. Its time to realize that if not today, then tomorrow, this will just become a norm.
He urged: So its probably best to just familiarize yourself with it now. Stay ahead of the curve as much as possible.
Nonetheless, Belliarsio still described himself as old-school. His own educational experience developing the site has been an awakening to him, he continued. Steel Valets functionality, and the ways it can benefit users, are worth a try, he said.