Drive for digitalisation at SSCs just starting

The drive for digitalization at distributors is only starting and will be further stipulated by customer demands as well as intensified by big stockholders and mill-tied distribution, according to speakers and attendees at the “Stahlhandelstag,” organized by German stockholders association BDS.

“There will be more direct mill distribution because of digitalization,” said Heinz Juergen Buechner from Deustche Industriebank, adding mills would rather eye large buyers and not smaller buyers across regions. “SSCs will have to expand their digital activities to counter that,” he said.

Large distributors, such as Kloeckner, were likely to reshape the market, he said; online platforms, such as Alibaba or Amazon, were further intensifying competition, but likely mainly for small purchases.

Kloeckner CEO Gisbert Ruehl said “small buyers who buy a sheet here and there will possibly be satisfied with Amazon or Alibaba.” “But I don’t want to rule out that Kloeckner won’t be selling on Amazon or Alibaba,” said Ruehl.

The aim of Kloeckner is to provide an independent sales platform, where distributors can sell products either as “shop in shop” or in a marketplace where a price comparison between offers is possible. Kloeckner will nevertheless receive a margin on sales. “The margin for us will be smaller in comparison to Amazon, maybe 2%, 3%, 4%, it’s difficult to predict,” said Ruehl.

The large-scale distributor continues to research in spot market pricing and was working together with a Silicon Valley startup look at the topic of predictive sales and semantic matches. “Predictive sales means less net working capital,” he said.

Kloeckner is however not the only one providing a sales platform, and Ruehl thought there would possibly be a consolidation of platforms in the future. “There will be one platform that will assert itself, but there might be a consolidation and possibly one or two in the future. But there’s also only one Facebook or Amazon,” he said.

Iris Karsten from Karsten Stahlhandel expectd to save around €60,000 per year through digitalization at the company, highlighting mid-sized stockists had to embrace the development as well.

The oversaturatation of stockholders in the Rhine-Ruhr area was making it harder for smaller companies. “There are 76 other stockists in a 50-km radius from us,” she said. At the same time challenges — such as lack of skilled workers, government support and shortages in trucks — had increased, which already saw some stockists close down, she said. “I do expect an increase in insolvencies.”

Laura Varriale, PLATTS