Episode 1 | Taking Metals Online

Greg Raece (00:30): And today we’re going to kick off the series by talking about why the new way of buying metal is winning over an old age industry. But first, we need a little history. So Michelle, Online Metals has more than tripled in revenue since you started, and you’ve been in the business of e-commerce since 2009, and you’ve been with Online Metals since 2014. What are your thoughts on what you’ve done?

Michelle Edwards-Lanham (00:51): Well, when I came on board, all of the Online Metals transactions were done online on the website, but we weren’t doing anything online to actually attract new customers and to work at retaining our current customers, or to really have a modern digital experience that we would consider to be on par with other e-commerce sites. Primarily, what I did was put programs into place for digital marketing, like email, organic search, paid search, data analytics, and updating the user interface. So one of the first things we had to do was actually redesign and rebrand the website itself, because it was the same content and experience that had been there for about 15 years. We had blinking GIFs and all of that original dot-com 1.0 experience. So I really helped to bring it into a more modern experience.

Greg Raece (01:45): Do you have an example of one of those blinking GIFs that was on the site?

Michelle Edwards-Lanham (01:48): Yes, we were at that time just welcoming Canada to our website, so we were able to ship orders directly to customers in Canada. So we had a beautiful blinking Canadian flag on our website to alert them to this wonderful new opportunity.

Greg Raece (02:13): Oh, that’s wonderful. I know Canadians love blinking Canadian flags, so I’m sure that drove a lot of sales from up north. Well, I joined Online Metals not long after you did in 2016. And I came from Microsoft, which ironically is a cloud company, the very opposite of a metal company. And when I came on board, yeah, the website was in great shape, and what we really needed to do was just take it to the next level. And so we’ll talk a little bit more about that today too. So Michelle, you mentioned bringing the website and digital marketing to a more modern experience. What was buying metal like for customers back in the old days?

Michelle Edwards-Lanham (02:50): Most of the other businesses that were online at the time didn’t actually have e-commerce capabilities. They might have a website where you could locate them and find their office hours and a phone number and call and do your transaction offline. But as a buyer, you still had to call and get a quote and negotiate your purchase before going to physically pick up your order. Online Metals was one of the earliest adopters of true e-commerce where the pricing, product catalog, everything was upfront to a buyer on the website. They could go to the website and buy anything like you would go to Amazon and buy tennis shoes. It was just like any other website, but for metal.

Greg Raece (03:33): Wow. So traditionally I guess you’d need to negotiate the contracts for large quantities in order to get favorable pricing, and that would leave like a fabricator unable to be nimble with their manufacturing. They’d need to know what they were going to be making maybe 12 months from now in order to get a good price on a buy today. But the online model that Online Metals put together has many benefits to the buyers. I mean, just being able to buy the quantities you need makes your business more flexible and more nimble in the marketplace. If you’re a fabricator, it reduces the amount of space that you need to store. And it also reduces that overhead cash needed to operate your business, so rather than investing it all in capital upfront and have materials sitting in the warehouse that you may never be able to use, you don’t need to do that. You can get it as you need it on an ad hoc basis.

Michelle Edwards-Lanham (04:16): One of the things that we have done with our customers too to help compensate for the negotiated pricing that is required for large contract purchases is that we actually offer our customers incentives as they go. You don’t need to commit to a particular dollar amount here and today for today’s purchase. But when you do buy from Online Metals, you actually get added to a rewards program where you get discounts in the future based off of today’s purchases. So that’s really leaving our customers free to work with their capital at hand without having to commit to large inventory amounts, but still being able to be compensated for their loyalty and coming back to our company over and over for all of their future needs. I think this is a pretty unique program. Do you see many other people with the loyalty programs in our industry?

Greg Raece (05:31): Not too many in our industry. I don’t think it’s something that they necessarily think about from a customer point of view.

Michelle Edwards-Lanham (05:21): Yeah. And there is a lot more competition right now in terms of putting things on sale and having special offers in an effort to acquire those new customers.

Greg Raece (05:31): Right. I think a lot of that’s coming from a sales point of view where we think largely from a marketing point of view, and the real key differences there are that they think about sales in quarters in how much inventory they have to move, which we also do. But we think about it from that customer point of view of how is this a better experience for them and what kind of solutions can we build right now to help them out? Another example is, what can we offer that’s going to give them more value? Versus we need the customer to take so many pounds of aluminum 6061 sheet this month, and why didn’t they take as much as they did this month as they had the month before?

Greg Raece (06:05): A lot of big companies look at this as one that erodes other sales regions instead of leading them in the direction they want to go, almost like they’re cannibalizing themselves. And in a way, they’re acting like Blockbuster, where they’re just so entrenched in their existing capital and making sure that the existing footprint works, even though the trends aren’t there to support that model going forward, it limits their online options. I mean, and for them, it’ll come back and bite them if it hasn’t already. So let’s actually talk about who our customers are.

Michelle Edwards-Lanham (06:33): We have a broad range of customers. One of the reasons that we have this broad range is because we don’t have a minimum order on the website, so it can be appealing to a DIY fabricator, or an independent maker, or artists. But we also have a lot of customers that are large manufacturers in larger businesses.

Greg Raece (06:52): A very large percentage of our customers are B2B2B. Did I get that right? Is that the correct amount of bees?

Michelle Edwards-Lanham (07:00): That’s right.

Greg Raece (07:00): Okay.

Michelle Edwards-Lanham (07:01): B2B2B.

Greg Raece (07:02): Thank you. They’re buying from us and they’re manufacturing a product that they’ll then be selling to their customers. So, for example, machine shops and fabricators building stuff that will get sold to others.

Michelle Edwards-Lanham (07:13): Right. And then we also have customers from larger organizations who need smaller quantities of products, usually for projects like prototyping or maintenance and repair. So we can help customers that come anywhere from myself who might be doing a project at home where I’m making planters for the front yard, all the way up to a company like NASA.

Greg Raece (07:40): Or I guess too even if NASA wants to make its own planters, we’d be able to help them out too. Tell Elon Musk about that. Michelle, looking ahead, do you have any crystal ball predictions about where the industry is headed?

Michelle Edwards-Lanham (07:52): I think the industry is going to go the same way as a lot of others are going right now, that’s with the smaller regional startups and independent locations and the small town locations that are offline are working to go online. And they’ll eventually be swallowed up and acquired by larger businesses that want to take advantage of having a geographical spread for fulfillment reasons, which is very important in an e-commerce industry looking to get close to your customers and in those really optimal shipping lanes. And that’s a lot like what we did becoming part of the ThyssenKrupp organization. So I think there’s going to be a lot of consolidation on the vertical level and from a horizontal positioning perspective, I think we could see the industry spreading out and looking to become not just a commodity material provider because we’re all offering pretty much the same thing. We have the same aluminum profiles. We have the same steel sheets.

Michelle Edwards-Lanham (08:52): So what we need to do to differentiate is become a service. And I see a lot of these metal suppliers adding other capabilities into their business, and that will really allow them to take care of their customers from beginning to end of the whole life cycle of their customers’ products and projects and not just getting a little piece of the business in the middle, which is the commodities sale where they’re always losing margin and looking for ways to make their business more value add.

Greg Raece (09:25): I think there’ll be a big growth in micro-manufacturing where we’re going to see smaller services being done by smaller companies that you would normally think a larger industrial company could do, especially as we saw during the early days of the COVID experience where there were a lot of shops and a lot of independent folks putting together make their own respirators and face shields and other things. They were basically providing that supply chain that the larger companies couldn’t do. And then as we’ve seen, it’s all going to be done online, where I guess you can imagine it, you could probably go online, select it, design it, order it, get it prepared, and shipped to you, and you’ve become a manufacturer even though you’ve never touched any of the material itself or any of the machines until the product actually arrives at your door.

Michelle Edwards-Lanham (10:13): The metals business itself now has to be much more customer-focused. So the buyers, they have access to all of the information. Nobody’s pricing is a secret. And so sellers like us have to work really hard on providing additional services, information, knowledge, data. Anything that is going to help our B2B2B customers eventually compete in the marketplace and win is what sellers are going to have to do to also succeed themselves.

Greg Raece (10:47): And that’s great for buyers. So we’ll definitely see more and more of them buying and moving online to get their metals, because it’s going to be about them, the customers. So this is going to be a six-part series. This is part one of those six, and we’re going to continue to record these. We’re going to bring in guests. We’re going to talk between ourselves. Our goal is to really help give you some great insight into the metals industry, the trends that we’re seeing, and also maybe even an opportunity for you to join us as well. So thank you very much. We are not here to buy your grandma’s gold tooth. Nope. We’re pretty much in the industrial metals. So that’s another thing we’d love to clarify.