Customer stories
How B2B marketplaces are transforming traditional industries
B2B marketplaces are on the rise, transforming trade in traditional industries. We sat down with startup veteran, Vanilla Steel Co-Founder and CEO Alexis Ducros to get his perspective on the role of marketplaces in enabling this digital revolution.
B2B marketplaces are on the rise, transforming trade in traditional industries. We sat down with startup veteran, Vanilla Steel Co-Founder and CEO Alexis Ducros to get his perspective on the role of marketplaces in enabling this digital revolution.
Jess Garnham
19.09.2023
The European steel trade is considered one of the most traditional industries. What does trade look like today?
The European steel industry has a glorious past dating back to the Industrial Revolution in the 19th century. Yet despite this rich history, the steel trade has evolved little over the years. The supply chain is not digitised, and many things are done very old-fashioned. Most transaction volume is being traded offline and remains analog. Sales professionals visit each other in person, follow up with phone calls and emails and use archaic technology. To give you an example, some steel professionals are still using fax machines to discuss transactions!
What do you think is the main reason for this lack of modernisation in trade?
Although there has been lots of innovation and progress made on the production side over the years, the distribution and supply chain has struggled to keep up with digital transformation. The main barrier has been the traditional view that digitising aspects of business would go against a "people" business, and undermine trust and the quality of services.
What has been the consequence of this lack of digitisation?
Due to the pushback on digitalisation, the supply chain has a fragmented market structure and could be more efficient. Most processes are manual and tedious, with transaction friction points regarding services, including financing and logistics. There is also no transparency regarding material availability and prices. You have to rely on your contacts. Last but not least, the lack of available data prevents different stakeholders from making data-driven decisions.
How about compared to other commodity industries?
Steel would have to be one of the most traditional industries alongside other industrial goods like the lumber, paper or cement industries. Despite steel being the second most traded commodity in the world, after oil, it is still operating without a unified marketplace with global price indexes and robust futures or other hedging instruments. The industry has great potential to modernise and make the supply chain more efficient.
Many changes are coming to the steel trade off the back of a new generation of employees entering the workforce. Can you tell me more about this?
The next generation of workers in the industry desire a modern-day purchasing and trading experience and recognise the efficiencies this can bring in trade. They want to be able to access and use digital tools they use in their personal lives. The suppliers try to set the rules, but when you have new users and buyers who say, 'I don't want to use faxes, I don't want so many manual processes - I want to use the tech I use in my everyday life,' this forces a transition to a more digitised experience. The pandemic was also an enabler as the industry realised that trust doesn't have to mean face-to-face and exposed the supply chain as relatively non-resilient.
What exactly does Vanilla Steel do?
Vanilla Steel is a B2B marketplace that provides digital matchmaking and on-demand services for the steel industry. We started our journey with focus on excess material, already processed material, that we can help requalify. Our vision is to become the digital infrastructure that facilitates metals trading and procurement across EMEA. We are committed to providing the most efficient, transparent, and trusted platform that connects buyers and sellers across the European steel industry.
Alexis Ducros
Founder & CEO of Vanilla Steel
How does Vanilla Steel solve the pain point for modern-day buyers?
Our one-stop platform can solve a combination of pain points rather than just one. Today's steel buyers are looking for a more efficient and modern trade experience that solves inefficiency and opacity in the industry, and that's what we offer. Through a marketplace, buyers can have digital discovery, a seamless experience to select and compare options and find what's available at which price. This is a game changer for the industry where there is considerable fragmentation and limited access to market information. We started as a marketplace focusing on digital matchmaking and acting as an agent. However, we identified the need to better serve our customers by providing them with on-demand services for both payments and logistics.
Why are payment services critical in your industry?
Payment services are essential because we are talking about quite sizable transactions. In the industry, you don't pay upfront for goods; you need credit lines to work with someone. Access to credit creates new trade relationships and helps to retain existing ones.
How does Vanilla Steel offer payment services?
We use payment services to remove transaction friction in live trade situations. We opted for embedding payments into our product and have been working closely with finmid as our one-stop-shop fintech partner. finmid allows the most seamless customer experience while keeping a positive working capital on each trade. This benefits both our marketplace and the customer.
“finmid allows the most seamless customer experience while keeping a positive working capital on each trade.”
How have you found working with finmid?
It's been very positive so far. Last year, we spoke with most of the European fintech specialising in B2B marketplaces, and they were our top choice as they understood our needs and have shown flexibility in building the relationship. finmid understands the business model of fast-growing digital marketplaces well, and they prioritise the user experience. We've been able to work closely together. It's a bonus that we're both Berlin-based startups.
What does an end-to-end experience look like for buyers through Vanilla Steel?
Through our marketplace, buyers can choose the material steel and then add payment services and or logistics at the point of purchase. finmid is an embedded partner that allows us to do this. There are no direct touch points with the customer - the most seamless experience. Offering credit lines to our customers boosts the value that we offer.
“Offering credit lines to our customers boosts the value that we offer.”
You say it boosts the value that you offer. Can you elaborate on this?
Sure. Payment services are critical given the nature of the steel trade. We have regular customers that we need to deal with high volume, low margin recurring business. Providing credit lines to our trusted customers is critical as we can focus on prices and logistics discussions instead. By providing payment services, we can increasingly serve more and more end users who value our ability to provide payment services and logistics for a seamless experience combined with our smart, digital matchmaking.
Undoubtedly, the generational shift is spurring the rise of marketplaces in traditional industries. Are there other market factors driving the adoption of marketplaces?
B2B marketplaces help to make supply chains more efficient and transparent, providing the best user experience and allowing professionals to make data-driven decisions. This means they are also well-positioned to help facilitate the net-zero transition. With industries facing more sustainable regulation, such as carbon emission standards, marketplaces can assist with better documentation and data so buyers can make more informed decisions.
Now, lastly, what's next for Vanilla Steel?
We are only beginning our journey in building an independent digital infrastructure that brings innovation and data to the EMEA metals ecosystem. While we have mainly focused on European domestic transactions, we intend to develop our export and import capabilities to serve our customers across the regions better.
About Vanilla Steel
Vanilla Steel is the largest independent platform for steel professionals across EMEA. The company is headquartered in Berlin and is managed by its 4 co-founders, who combine 50 years of digital experience and that are passionate about solving existing challenges in the metals industries through digitisation. We believe sourcing or selling materials online should be simple. We enable buyers to find and buy excess and prime metals directly from European suppliers. Excess material includes overrollings, aged inventory, declassified or semi-finished products. To learn more about Vanilla Steel visit vanillasteel.com
Jess Garnham
Marketing
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