Market Research - Testing the Steelscreen Concept.

THE ANALYSIS PROJECT The subject of the analysis was to determine the demand for a web based marketplace for steel and metals among the traders in Europe; and also how they believe such a marketplace ought to function. AREAS OF INQUIRY • How do traders use the Internet today, at home and at work? • What advantages and disadvantages do they see in web based trading? • How do they picture the development of trading on the Internet; in general and metal trading in particular? • Is there an interest in buying steel and metal on the Internet? • Does the Internet solve any particular problem? • What kinds of steel and metal products are best suited for trading on the Internet? • Does the identity of the supplier have any significance when trading steel or metal? • Ought the marketplace be independent of suppliers? • Are there any other fields of business that ought to be connected to Steelscreen (logistics, welding consumables etc) ? • How do traders like to get more information about Steelscreen? (web site, e-mail, personal meeting etc) • Background facts (turnover, age, gender etc.) INTERVIEW WORK REPORT Gross selection Do not speak English etc No phone number Do not buy steel or metal The company closed down Duplicate Vacation/business trip Net selection Not reached Refused interview Interviews Response rate Total 272 38 58 13 7 4 8 144 19 13 111 77,62% Swe. 24 0 0 0 3 0 0 21 3 3 15 71,42% Nor. 14 0 0 1 1 0 1 11 0 1 10 90,90% Den. 15 0 0 1 0 0 1 13 1 2 10 76,92% Fin. 21 0 0 0 0 0 0 21 6 0 15 71,42% Ger. 42 14 5 2 0 1 1 19 3 1 15 78,94% Eng. 18 0 0 1 2 1 1 13 1 2 10 76,92% Swi. 22 3 3 4 0 1 0 11 0 1 10 90,90% Hol. 16 0 0 2 0 0 0 14 3 0 11 78,60% Spa. Ita. 33 67 0 21 17 33 2 0 1 0 0 1 1 3 12 9 2 1 2 1 8 7 66,66% 77,77% BACKGROUND FACTS Š Average age: 43 years Š 93% men, 7% women Š Position: Senior buyer, buying engineer, production manager. Š Turnover: 90% over 20 Million SKr per year Š Volume: 76% buy more than 200 tons per year WHERE DO TRADERS USE THE INTERNET? At work At work and at home 50 At home Do not use the Internet 44 45 44 41 40 35 30 33 31 29 24 % 25 20 20 16 15 10 6 5 7 4 0 30 - 30-45 years 45 + HOW OFTEN DO TRADERS USE THE INTERNET? Seldom Several times per week 50 Once a day Several times per day 46 45 42 39 38 40 34 35 34 30 % 25 20 17 15 17 14 15 10 5 3 0 0 30 - 30-45 years 45 + INTERNET CONNECTION Modem ISDN Broadband Do not know 100 100 100 90 80 75 70 70 57 60 % 50 48 30 20 10 333333 30 2525 12 25 23 15 15 11 7 0 0 Total 44 43 38 21 14 8 56 50 46 36 36 40 34 Sweden 67 00 00 0 00 00 Norway. Denmark Finland England Germany Switzerland Holland Spain 00 Italy BUSINESS CONNECTIONS TODAY Telephone Fax E-mail Internet Post Personal meeting 100 100 90 80 93 80 80 80 50 % 50 20 10 67 64 50 47 40 30 75 60 60 23 30 27 20 19 7 4 4 7777 0 0 0 Total 1010 Sweden 20 10 77 7 Norway Denmark Finland 50 30 20 20 00 25 20 77 0 0 999 00 0 71 71 62 45 13 000 0 86 82 70 70 100 93 93 90 79 77 Other 0 England Germany Switzerland Holland 12 0 0 Spain 000 0 Italy BUSINESS ACTORS ONE TRADES WITH Wholesale dealers Producers Service Centers A combination Traders/Agents Other 100 100 93 93 90 80 80 70 67 70 70 50 50 47 45 40 40 30 25 13 7 2 4 7 0 29 27 20 20 10 75 60 % 50 30 100 91 87 90 60 100 10 0 00 00 00 0 1313 0 13 10 0 0 20 20 0 0 12 0 00 0 000 0 1414 0 00 0 0 Total Sweden Norway Denmark Finland England Germany Switzerland Holland Spain Italy 0 ADVANTAGES OF E-COMMERCE Š Š Š Š It is fast. 40% Easy to find information. 32% Lower cost. 18% No advantages. 17% Š Other answers: • “Status of stock can be seen.” • “Gives a better general view of the market.” • “Cuts out paperwork.” DISADVANTAGES OF E-COMMERCE Š Security. 34% Š Unreliable deliveries. 14% Š No disadvantages. 13% Š Other answers: • “The personal contact is lost.” • “There is more risk of mistakes when you do not talk to someone.” • “Unreliable quality.” WILL E-COMMERCE WITH METALS... Increase Not change 100 100 Decrease Do not know 100 93 91 87 90 87 80 80 88 80 80 71 70 60 % 50 40 29 30 20 20 10 20 12 10 10 7 01 00 000 000 00 0 13 12 9 00 00 00 00 00 0 Total Sweden Norway Denmark Finland England Germany Switzerland Holland Spain Italy WOULD YOU CONSIDER TRADING AT A SITE LIKE STEELSCREEN? Yes No 100% 10 90% 80% 27 46 50 38 50 60 70% 36 40 67 60% % 86 50% 90 40% 30% 20% 73 64 60 54 50 40 62 50 33 10% 14 0% Total Sweden Norway Denmark Finland England Germany Switzerland Holland Spain Italy WHY? 48 50 45 40 40 40 33 35 30 % 25 20 15 10 5 0 It is fast Easy to find information Price Other Š Other answers: • • • • “You come into contact with companies you did not know about.” “Simplifies the routines.” “I’m open to anyone as long as the e-commerce works safely.” “I want to test it and see how it works.” WHY NOT? 100 90 90 80 70 60 % 50 40 30 20 16 10 10 0 Security Unreliable deliveries Other Š Other answers: • “Since transportation is the big expense I don’t think this will be more effective. There’s also a greater risk of getting bad quality steel. • “I’d rather have the personal contact.” • “Today we have so many technical discussions before we reach a decision, so at the moment it’s not an issue. We have to develop more.” PRODUCTS 43 Stainless steel in several forms 40 Hot rolled plate 37 Cold rolled plate 33 Pipes 23 Rods/bar 18 Pipe sections 17 Sections 13 Aluminium in several forms Hot rolled coil 12 Cold rolled coil 12 7 Rebar 45 Other 0 5 10 15 20 25 % 30 35 40 45 50 DOES THE IDENTITY OF THE SUPPLIER MATTER? Yes 100% No Do not know 2 9 90% 80% 29 33 32 50 70% 80 60% % 64 100 50% 40% 30% 100 100 100 71 67 67 100 50 20% 20 10% 27 0% Total Sweden Norway Denmark Finland England Germany Switzerland Holland Spain Italy SHOULD STEELSCREEN BE INDEPENDENT? Yes No Do not know 100% 90% 20 17 18 17 33 80% 70% 20 17 20 14 20 40 17 20 18 20 29 60% % 50% 83 40% 30% 100 20 63 67 67 60 80 64 60 57 40 20% 10% 0% Total Sweden Norway Denmark Finland England Germany Switzerland Holland Spain Italy ADDITIONAL LINES OF BUSINESS Average Technical product information Raw material information -15 Logistics -17 Welding consumables 4,06 77 3,90 -50 2,28 21 1,97 10 -70 -75 2,41 30 -55 Industrial grease 2,78 35 -52 Industrial gases 3,00 44 -45 Financial services 3,63 61 -38 Cutting tools -100 79 -10 -25 0 25 50 75 100 % Rather or totally unimportant Rather or very important CONCLUSIONS AND RECOMMENDATIONS Š Most people think that metal trading on the Internet will increase. However, few see any immediate advantages in the new technology. The traders are satisfied with today’s buying process, and ascribe the expected increase in e-commerce to IT development in general. Š Steelscreen’s task will be to add customer values in this new channel. Š Why should you buy metal on the Internet? Š It is the future Š Easy to find information. Š Do not want to be left behind. Not good enough! CONCLUSIONS AND RECOMMENDATIONS Š Steelscreen has to prove to future customers that e-commerce saves time and money. Š A great barrier against e-trading metals is that buyers are afraid to abandon the personal contact with suppliers. To make traders use Steelscreen it has to have a vivid brand with a “face” and stand for certain values. Buyers have to trust Steelscreen concerning: Š Reliable deliveries Š Best price Š Quality Š Able to solve complex problems CONCLUSIONS AND RECOMMENDATIONS Š Steelscreen must not forget brand building within traditional channels: a strong trademark there is essential for future buyers to find the web site. Steelscreen must own the concept of “metal trading on the Internet”. Š Our view is that the web site should be constructed so that a personal relationship between the buyer and Steelscreen is created. One way to do this would be to have a virtual person hosting the site, such as Hera Qraft or Miss Boo.