Episode 3 | How Industrial B2B Can Thrive In Uncertainty

Michelle Edwards-Lanham (00:00): Hi. And welcome to episode three of the Metalpress Podcast. I’m Michelle Edwards-Lanham, E-commerce Marketing Director at Online Metals, and joining us today is Travis Schultz, our general manager. Travis, thank you for being here and hopping into this conversation with us. Why don’t you tell us a little bit about you and what you do at Online Metals?

Travis Schultz (00:30): Yeah. Absolutely. Thanks, Michelle. So as you mentioned, my title here is General Manager, and I am in charge of the overall customer experience, e-commerce experience specific to product, pricing, and again, just the overall general customer experience at Online Metals.

Michelle Edwards-Lanham (00:47): Great. Thanks. So today we’re going to talk about what we’ve learned during the Coronavirus pandemic and what we’ve done to actually thrive as an organization during these uncertain times. Travis, tell us, what did you notice when COVID first hit?

Travis Schultz (01:07): There was a variety of things. Fortunately, for our business model, we weren’t impacted immediately because I’d like to say we had the foresight to plan around it, but fortunately it was just a little bit of luck involved there as far as being prepared from an e-commerce perspective in allowing us not to have as much interference as a lot of other industries when COVID did hit. That said, we did start to feel the effects in April when the economy in general started to feel the impact of businesses starting to slow down, and obviously a subsequent effect of that was lower business, slower business for us, but as I said, our business was geared towards almost being prepared for something like this in regard to people looking to save money and being able to buy smaller products or smaller quantities of products they need to maintain in their business.

Michelle Edwards-Lanham (02:04): Yeah. Yeah. I think that what we were seeing on our website is that there was more traffic actually from new visitors, people who were going online potentially for the first time, looking for resources to replace other resources that they might have had offline, business suppliers, business partners, those resources that weren’t able to continue operating because of the COVID restrictions when in the beginning, there was a lot of business shut downs and only essential services were really allowed to be open and operating. So in the beginning it seems like we may have actually benefited a little bit from a surge of the online business.

Michelle Edwards-Lanham (02:51): People getting online for the first time and because our business was set up for it, we were really ready to take on that traffic and fulfill smaller orders easily, take on new business. Customers could make their own accounts and really get their self service into place. And so as the pandemic progressed and a lot of people were finding themselves having supply chain issues with their kind of traditional partners, we were really in place to be able to handle that. And there was already some issues with supply chain for our industry due to some of the new tariffs, like the aluminum tariffs and restrictions on imports and other businesses were seeing some disruption in their supply chain. And I don’t think we saw any interruption in the availability of materials for our business. Would you agree with that, Travis?

Travis Schultz (03:56): Absolutely. We are very fortunate in the ability for us to not only maintain, but be owned by one of the strongest supply chains in North America to thyssenkrupp allows us to have that steady, consistent supply chain internally. And then we also have put a significant amount of effort over the past 20 years since the business started to really diversify our supply chain. And that did pay dividends when we went into a lot of the, as you said, the hardships that others face in the supply chain, when they were tied to one or two suppliers. We did not feel that impact.

Travis Schultz (04:33): However, we’re actually extremely fortunate in that impact in regard to that, as far as bringing new supply chain in and being able to secure a steady supply chain to our customers when we saw the high levels of traffic that you referenced. I would also have to say that a little bit of luck played into it too, is that we did maintain a fully functional operation throughout all of this, which allowed us to serve our customers to the highest level of their expectations and big part of that was we were not faced directly with anyone diagnosed with the COVID-19 throughout this all which could have been a potentially detrimental to the business as we saw in other businesses around the world.

Michelle Edwards-Lanham (05:19): Yeah. Yeah. We were definitely lucky in that regard. I think I recall we only had one supplier who shut down because of COVID at their facilities and for them it was a decision to close because their volumes were so low and the risk just wasn’t worth it.

Travis Schultz (05:37): Yeah. Absolutely. And that was very unfortunate. And we did see that, but you know, a big part of us, I mentioned luck, but really a big part of that also was that we did take significant steps right out of the onset as far as social distancing within our facilities that allowed us to have safe environments, a place where people felt safe to come to work, as well as making sure people were not exposed while at work via the social distancing that we experienced or that we implemented via the pandemic.

Michelle Edwards-Lanham (06:13): Yeah. Yeah. That was really, as you said, a bit of luck and some good quick decision-making on the part of everyone managing the Online Metals business. And I think another thing that we saw during the downturn that benefited our business was that a lot of the direct competitors were dialing back on their ad spend. Because they might have been slowed down due to lower demand or lower ability to service the demand. There was less competition online for advertising. And so for us, we were able to get more traffic to our website at a better price, which in turn gave us a much better return on our ad spend. And again, kind of fed back into helping with the overall profitability for us at that time. And so that efficiency was a big help. And now that we’re back to business as usual with the typical competition on product and brand advertising, we’re actually even seeing a few competitors coming into the online space and into the online auctions for the first time.

Michelle Edwards-Lanham (07:30): So I think some of the businesses that had shut down for a while are back in full swing, as well as with some of these businesses that maybe never were online coming online are realizing that they need to have an e-commerce website. So our industry is really no different than the restaurant industry and other local businesses that suddenly realized they need to find a way to get online and continue their business with e-commerce. So we’ve seen a lot of businesses get started during this pandemic online or move toward accelerating an e-commerce presence that they already had. So I think we’re looking at the year of e-commerce.

Travis Schultz (08:15): Yeah. Absolutely. And I would fully agree with that. We are looking at going into another year where e-commerce will see what we assume some really strong tailwinds as far as continued expedited growth in that area. Because right now, no one really knows when we’re going to get back to normal. There’s a variety of things going on obviously with the recent election. That’s going to have another impact, either positive or negative on the economy next year. And even with the vaccine that we’ve been talking about recently for COVID, I fully expect that e-commerce will remain a strong component of industry’s growth across the board, regardless of industry.

Travis Schultz (08:59): And right now, I think everyone’s preparing for not knowing when we’re going to go back to what we consider to be the norm per se. And in regard to future planning, it makes it significantly difficult to do any forecasting or budgeting. Looking at my career here and going back and looking at forecasting in three and five-year chunks has become a significant difficulty looking and analyzing the historic trends because really we’ve moved from a I guess the 30 day plan to almost a one or two day plan based on the volatile swings that we’re seeing in the economy and the day to day. And I think a big part of what lends itself to the success that we’ve seen, not just because of the strong e-commerce that we have, but also continuing to be agile as a business. And a big part of that comes from the leadership group here at Online Metals and our ability to react to the challenges that we face this year and remain agile as we must in this e-commerce industry.

Michelle Edwards-Lanham (10:08): Yeah. Yeah. That’s for sure. And I think everyone is seeing the same volatility that we’re seeing where one day we’re having a great day and then suddenly the next day things drop and sales are down and we just don’t know why. We may not have done anything different. We’re driving all the same traffic to the website. We have the same products, the same offers, same availability of materials from day to day, but for some reason the performance of the sales and the traffic can be very erratic. So when it comes to planning for the future, I think other businesses who are new to the online aspect of material sales, they’re going to have a lot of issues to work out from a fulfillment perspective and understanding how much it costs them to package up and ship out an order, how much it costs them to get the orders in and comparing those expenses with what they may be accustomed to accounting for in a retail space could be quite different.

Michelle Edwards-Lanham (11:19): And then when you have these ups and downs from day to day, it can be very difficult to project out longterm what these businesses are going to need to invest in from an infrastructure and support perspective for their businesses. So I can imagine that some businesses who are new to this world of warehouses and e-commerce fulfillment, if they don’t have really kind of deep pockets to rely on getting them through the ups and downs that are most likely going to continue, it’s likely that we might actually see the competitive landscape clear up a little in regard to businesses that just can’t survive it.

Michelle Edwards-Lanham (12:08): And they can’t make it through this period that we’re going through, where it’s unknown and the planning and projections can be difficult to make. So we have years of data and a very tight warehouse metrics that we can look at in terms of knowing how many people we have picking and packing and fulfilling the orders. And we know how many items per minute, each person is processing and looking at the margins of our products and all of this kind of infrastructure and calculations and KPIs that we can use to measure the business that will help us, but essentially a new business model for a company, that could be quite challenging.

Travis Schultz (12:56): Yeah. Well said. We have years and years of data and metrics that we’ve allowed us to really optimize our business in the e-commerce industry and put us a step ahead of our competitors over the years as we’ve seen competitors pop up at a pretty vigorous pace the past five years. Specifically this year, we’ve seen new competitors come and not really know what they’re doing and fumbling around and trying to find their way through the fog so to say. Where we have the strong foundation again, based on the history and the data and analytics to really make that customer experience premium and a big part of that too, is from a customer perspective is that it’s allowed us to gain more trust with our customers.

Travis Schultz (13:40): So not only have we been on the market for a number of years, so we have got a lot of brand recognition, but now customers are almost been, I hate to use the word force, but I will in this context is of forced to make their purchases online, which has given us at Online Metals an opportunity to really prove our worth and build that trust with the customer, which is one of the biggest challenges for any business in e-commerce is often bringing those customers from the conventional. I want to talk to my salesperson method to making that purchase strictly online and really being satisfied with the process and having those core customers kind of force fed to us this year has allowed us to really, again, prove ourselves and build that trust and really improve on the name Online Metals and grow that brand recognition in the market.

Michelle Edwards-Lanham (14:32): Yeah. That’s absolutely true. And I think we also have some offerings on our website that are helping those new shoppers. In addition to the trustworthy nature of the experience, we also on our website, we require a minimum order. So that really reduced the risk for somebody who might be trying out a new supplier for the first time. They can’t see us face to face and maybe they’ve never worked with us before and realizing that they don’t have to put their whole month’s budget on the line just to try us out, to get one order in really helps them and they can see how it works and see how we fulfill on our promise to get their materials to them quickly and accurately, and we also have some offerings like credit that other companies might not be able to provide, so we can give smaller midsize businesses net 30 credit terms.

Michelle Edwards-Lanham (15:35): And so if they’re struggling with cashflow that really helps them to be able to get those materials into their shop, fabricate their products, ship it out to their customers, and then get paid for those products that they’ve made before they even have to pay us for the materials that they’ve purchased. So I think that’s a big help as well. And we’ve tried to predict what the customers and shoppers are going to need to hear when they get to a website for the first time. You know if they’re they’re hesitating and they’re not sure who we are and if they can trust us yet. So we’ve been trying to message to people, for one thing, the fact that we’re just still open and in the beginning of COVID and the shutdowns that was important because just because a website is up and running 24/7 doesn’t mean there’s anyone in the warehouse actually fulfilling and shipping out the orders.

Michelle Edwards-Lanham (16:30): So we were just looking at some messaging that was even that basic, like, yeah. Send us your order. We’re here and we’re open and we can ship it to you and making sure that those new visitors know about the credit terms and the no minimum orders and processing the credit applications and getting those orders out the door. And I think that there’s also others in our space that are catching on and maybe beginning to offer some of those new features as well. Are you seeing that also, Travis?

Travis Schultz (17:03): We’re definitely seeing that. A lot of what we’re seeing is copycatting. Right? The best flattery, I guess, is to be copied. And we’re seeing a lot of that in the market because there’s so much pressure on the e-commerce market right now and people trying to make their way into the field and they see us, I like to see, as a market leader. So we’re seeing a lot of mimicking of the promotions and value add props, but going back to that 20 years of experience that we have. We’ve really been able to optimize those and identify the needs in the market while continuing to grow along with the market to give those customers what they need and fine tune those processes along the way to bring a best in class level of customer experience to those customers. So they know that we are the market leader and going to a competitor who’s often trying to copy us for the most part, well hopefully they’ll see that the advantage of using Online Metals.

Travis Schultz (18:07): Another big advantage that we have that is going to take the customers, competitors, I should say a long the time to catch up is the diversity of catalog. So we spent a significant amount of time over the past years really bringing a one stop shop to our customers in regards to diversity of catalogs. And that alone sets us aside from a lot of, sets us apart, I should say, from a lot of our competitors. And over the course of the next year, I think, a lot of the biggest advantages are as we went on a new platform two years ago that’s really allowing us to fine tune a lot of the challenges that we had previously. And in regards to the level of customer experience that we’re offering, whether that be a lot of the advantages that you offered or just improvement in general of the shopping experience for those customers.

Michelle Edwards-Lanham (19:02): Yeah. Yeah. That’s right. You know, we’ve spent a lot of time working on expanding that range of products and adding in more services and improving the experience to better meet the needs of the market. And so now part of our focus is really looking at moving beyond just the products and improving those services. And as you said, that top-notch experience and over the course of the pandemic some of the improvements that we found ourselves making to the website in real time was adding resources for customer shopping and about how to find anti-microbial materials and explaining the anti-microbial material or properties of certain materials like copper. You know we added sneeze guards to our product catalog. That was something we never offered before. We refocused messaging on making sure that all the promotional pricing was really there to help the customers stretch their budgets and making sure everyone knew about that.

Michelle Edwards-Lanham (20:25): We’ve also expanded the ways that we communicate out to customers and that customers can communicate back with us, like through mobile alerts. That was something that we also just added to the website this year and have really expanded upon since all of the shutdowns took place. And so while we are at a point of being able to say expand the catalog, improve the services, improve the customer experience, improve the messaging, we’re seeing competitors who are new to the market that are still kind of at the phase of just trying to figure out how do you ship out a sheet of aluminum without bending it or scratching it and getting it out the door safely to their customers.

Travis Schultz (21:16): Yeah. And that’s one of the areas that Online Metals definitely excels in in regards to getting those products out the door and at a cheap cost because we are shipping big chunks of metal that are often used for aesthetic purposes. They need these to be in the premium condition. And we’ve really prided ourselves over the past 20 years of optimizing that process. And we’re now in a position where we’re shipping out a number of packages a day and have less than a 0.5% reship rate. So that’s something that we definitely pride ourselves on, and it can be extremely challenging in this world of Amazon that we live in where everything comes fast and free.

Michelle Edwards-Lanham (21:55): Mm-hmm (affirmative) That’s right. The new buyers that are coming online, a lot of them are, they’re younger. It’s the new generation. They’re millennials. They are buyers who have grown up in an e-commerce experience. And so their expectations are quite high. It’s not acceptable to have orders go missing or items show up in a state of disrepair or not usable. So these new buyers, they want to know when is it shipping? When can I expect it? Why isn’t it free? Can I have it tomorrow? And you know, they really want their Amazon Prime of metals. And so that’s the experience that our marketplace is really going to have to try and create in order to be competitive.

Travis Schultz (22:55): Absolutely. Michelle Edwards-Lanham (22:58): Yeah. So in closing, I just wanted to reiterate one of the points you made earlier, Travis, about how important it is to be flexible and nimble as an organization and able to make decisions quickly to steer this business without necessarily over-correcting while also not underestimating the challenge at the same time. So while things are so volatile from day to day, we have to make these flexible decisions. Be in touch constantly as a management team, but also projecting a sense of stability out to our customers and helping them through this challenging time while agile ourselves, but being dependable to our customers. And we’re able to do this because of the way our business has been structured.

Travis Schultz (23:58): Yeah. Definitely in our circumstance, our business model was structured to succeed in this environment. As I mentioned earlier, we did have a bit of luck along the way. I think with any successful story, there’s a component of luck there. But overall we stayed agile. We took the right steps as far as preparation to not just set up the business model for success, but to keep everyone safe internally and socially distanced from the beginning of this. And that was a large component of that.

Travis Schultz (24:27): And it really lends itself to the continued level of success that we were fortunate to see throughout these challenging eight months since the pandemic hit in March. And yeah, we’ve had to fine tune some things along the way, a lot of those things we talked about today, but as in regards to the new products and new features on the website, but we are also, as you said, again, a big component of this was being a resource for our customers. Then that adds to that trust factor that allows us to not just get customers in the door, but really build a relationship with those customers and see them return and adds that lifetime value to our customer base.

Michelle Edwards-Lanham (25:10): Yeah. Yeah. Definitely that stability, the focus on safety has really helped us out. And the company overall achieved a really big milestone today, and I know you just received your t-shirt commemorating the safety, and reaching 1 million hours of safety throughout the company overall. And so congratulations on that. And this really does speak to the fact that we’ve always had this culture of safety even before COVID happened. And so congratulations.

Travis Schultz (25:51): Yeah. Thank you. It’s quite an achievement to your point. We did go injury free for 1 million hours. That’s across the country with amongst all 13,000 employees across our parent company. Quite an achievement overall, but even specifically in our industry, which we deal with a lot of high-velocity machinery and heavy metal, there’s obviously a lot that could potentially go wrong there. So it’s definitely the prime focus of our company on a daily basis. And we’re consistently preaching safety and following protocols and really even setting protocol in many cases and something that we are extremely proud of. And we hope we make it to another million this year.

Michelle Edwards-Lanham (26:37): Yes. Indeed. Thank you for being here today, Travis, and having this great conversation.

Travis Schultz (26:45): Thank you, Michelle.

Michelle Edwards-Lanham (26:46): And thank you for listening. Be sure to join us next time, where we’ll discuss how to succeed in the new normal of 2021.