1. 1 B2B Organizations The Steel Industry Akcaglayan, HalitBortey, Ishmael Chang, Thomas T.Chien, Jane Y Cukier, Juan J

2. 2 "Selling steel over the Internet is very embryonic. It could become an Amazon.com, or it could be not much. But it would be na ï ve to close our eyes to the Internet." -- USX chairman, Tom UsherUSX chairman, Tom Usher

3. 3 General Facts About the Steel Industry  Worldwide production is over 750M tons of the 3.000 different catalogued steel types available.  China, US and Japan are the largest steel-producing countries, followed by Germany, Russia and Korea.  Steel use is closely linked to the wealth of an economy (e.g., steel “consumption” per person is about 20kg in Africa, against 420kg in the US).  The industry employs about 1.3M people worldwide. Source: International Iron and Steel InstituteInternational Iron and Steel Institute

4. 4 Key US Players CompanyRankSpecialty USS (usx)1All types LTV Steel3Flat rolled National Steel 4Flat rolled Nucor8Recycling Timken___Bearings Source: International Iron and Steel InstituteInternational Iron and Steel Institute

5. 5 Steel and the B2B Model  B2B in the steel industry is characterized by: – Small market segments – Big amount purchases, both in money and volume – High expectations for service – Knowledgeable buyers – Most based on auction model (value is created by spatial matching of buyers and sellers)

6. 6 Market Share  By 2001, $32 billion of steel will be sold through internet portals compared to only $150 million today – Morgan Stanley Dean Witter  By 2005, 40-60% of all metal produced in the world will be sold via the Internet  E-commerce in metals sector is still in infancy – about 3% of total sales (Andersen’s global metal practice)

7. 7 Space for B2B sites to operate SupplierProducer Intermediary Customer = Space for an online steel site to operate New Value Chain for MetalSite Raw materials, coal, iron, scrap metal Integrated or Mini mill – about 60-80 producers Toll process, Distributor, Service centers – about 10,000 intermediaries

8. 8 Major Players in the E-Industry  MetalSite MetalSite  Metal Suppliers Online Metal Suppliers Online  Metal Network Exchange Services Metal Network Exchange Services  E-Steel E-Steel  All sites are relatively new. MSO was the first- mover, on Feb 1997.  All use rigorous qualifying standards before permitting companies to sell and buy online.

9. 9 Online Front Page Samples Membership is highly sought All sites provide multiple sources of information

10. 10 How Do They Attract Customers Online?  Cold calls (most)  Direct mail (most)  Links from.org-steel related sites (all)  Exchange of advertising for links (most)  Word of mouth (all)  Search engines (all)  Physical presence in conferences and seminars (all)  Recommend this site button (MSO)

11. 11 Three Components of Online Steel Sites  Buyers, who can: – Buy direct from steel manufacturers – Bid and negotiate deals – Order, ship, track and pay online  Sellers, who can: – Reduce selling costs – Select buyers (be in control) – Bring on new buyers economically – Take no cost risk of being on the Net  Industry managers, who can: – Read specialized news, industry analysis and editorials – Research and compare global metals industry specifications

12. 12 Advantages of Being Online  Provides an honest, secure and anonymous platform to trade metal distribution services.  Gives metal consumers the means to post inquiries which are immediately relayed to MNXS vendors that supply similar materials.  Further reach for sellers  Better prices for consumers  Lowered purchasing costs  Online auctions

13. 13 Online Auction Operation 1. Define Product 2. Specify Commercial Terms 3. Target Audience 4. Negotiate & Conclude A mastery of the subject is needed when auctioning A mastery of the subject is needed when auctioning Source: e-Steele-Steel

14. 14 Incentives For Customers to Return  Online utilities – Specifications search – Materials property data – Metric converter – Glossary  Subscription to newsletters (all)  Online donation capabilities (most)  Extensive archives, statistics, and databases  Updated regulatory information

15. 15  Careers databanks (MSO)  Bookstore (most)  Calendar with industry’s events (MSO)  Updated steel’s news (all)  Industry links (all)  Very strict privacy policy (all) Incentives For Customers to Return (II)

16. 16 Suggested Strategic Moves  Create virtual private marketplaces – These would preserve pre-negotiated terms and relationships between buyers and suppliers for future reference.  Increase security on transactions – Currently, no encryption is used, although privacy is a major concern among customers  Redesign pages; do not clot with information  Offer specialized advice and counseling  Implement a “guest” section – Most of the sites are only available to subscribers

17. 17 Suggested Strategic Moves (II)  Grow towards “meta B2B portals” – Provides closely related products – Allows sharing of infrastructure and services  Offer educational tours about the industry  Offer links to the participating companies  Establish consultant / consultee relations, not only seller / buyer  Remind buyers about offers according to previous purchases  Personalize pages

18. 18 Suggested Strategic Moves(III)  Expand into International markets  Standard Steel Language- sites should be consistent with the way they describe steel terminology.  Create some kind of online CAD hosting software For product customization  Move into other types of Internet transactions other than auction/direct offers. For example. Sites could offer Virtual marketplace and Collaborative Direct Transaction types.