With nearly $8 billion in 2017 revenue, PAO Severstal has built up an expertise over its 63-year history as an integrated mining and steel manufacturing company. It reported a gross profit margin last year of 39.7%, and net profit of $1.1 billion, according to its financial statement for the year ended Dec. 31.
But it was only a few years ago when it got serious about integrating e-commerce into its operations, providing all of its domestic customers—and targeted prospects in international markets—with a strong online ordering option to complement more traditional ordering channels of sales forces and electronic data interchange.
Our goal is 100% of customers using online services, and about 50% of orders placed online.
Victor Romanovskiy, head of e-commerce
Cherepovets, Russia-based Severstal’s mining and steel-making operations are based in several facilities across Russia, but its sales extend to customers in Europe, where it operates a distribution network. The company launched its initial website for customers in 2005, but with limited features and no integration with records of orders placed through sales reps or other offline channels. A decade later, Severstal’s e-commerce operation was still far off its potential and falling far short of the online features of its rivals and of its customers’ expectations.
‘It was time to change’
“In 2015, customers knew we had online and offline sales channels, but without connections between the two,” says Victor Romanovskiy, head of e-commerce. “Then we looked at our competitors. We saw it was time to change.”
In 2017, the steel company relaunched its e-commerce site on a Hybris e-commerce platform from business software company SAP SE. Severstal also uses SAP technology for enterprise resourcing planning, CRM and other software. Hybris is now part of SAP’s C/4HANA software suite.
The new website—which replaced a home-grown web shop that had offered a limited number of products and buying features—was designed to support Severstal’s goals of improving the online user experience with better content and faster checkout for customers in Russia and Europe. Within a year from now, Severstal plans to expand online sales to customers in Finland, Sweden, Poland, the Czech Republic and Slovakia.
Suiting customers according to need
Severstal, working with SAP, also designed the site to suit the differing needs of each of its three categories of customers: Industrial companies that purchase large amounts of steel for their own production purposes; big resellers and distributors that order a large number of SKUs; and smaller metals merchants that purchase in smaller quantities.
In addition, Severstal’s online services cater to industrial companies and large distributors that purchase steel in production, small distributors that purchase steel products already in stock, and small and mid-size customers who purchase steel through online auctions—”all through one e-shop,” Romanovskiy says.
He adds that Severstal makes nearly all of its products available online, except for customized ones—but even they can be re-ordered through self-service e-commerce, he says.
Compared with the home-grown site, the new one has already generated notable increases in customer order volume and usage of such online services as checking order status and inventory availability, Romanovskiy says. More than half, or 60%, of customers use Severstal’s online services, and customers now place 25% of orders (measured in tonnage) on the web. “We expect both numbers to increase,” he says. “Our goal is 100% of customers using online services, and about 50% of orders placed online.”
Content is crucial…
“One of the biggest improvements in a web presence with Hybris was in content management,” Romanovskiy says. Under the prior site, web content was managed within the back-end ERP system, in spreadsheets and on paper, he says. “The segmented information on every product was too complicated to manage.”
Now, Severstal’s web content managers can more easily generate content about products and services, share content and comments with colleagues through online workflow and conduct A/B tests to determine how customers are responding to new content.
With the improved control over content management, Severstal can more quickly generate the type of content demanded by each of its three customer groups. Industrial customers don’t need content that explains what each type of steel product does, but they need extensive details on measurements and other specifications crucial to their production operations. Large resellers and distributors are also knowledgeable about Severstal’s products, but they need information on such things as the availability of new or substitute products they can distribute to end customers. And smaller merchants who don’t buy in large volumes often need extensive details on the advantages of particular products.
…Fast checkout, too
Severstal’s new site also features faster checkout, cutting the former range of 20-25 clicks to complete an order to 10-15. The company continues to work on making checkout faster. “We plan to get to three to five clicks,” Romanovskiy says.
Providing more useful content and faster checkout has encouraged more customers to engage in self-service e-commerce, which has also freed up Severstal’s sales reps to focus on more complex orders, Romanovskiy says. “At first we had resistance from sales reps; they were afraid of new technology and thought it would ruin their careers. But we provided them information on how it helped them—and that they could earn more.”
Sales reps now spend more time understanding customers’ needs and letting them know about new products and services, rather than helping them place orders that customers enter online. “Reps can now spend more time working with new customers as well as established customers,” Romanovskiy says.
“Another benefit is operational efficiency,” he adds. “We don’t like to have to waste time placing orders via paper, fax or phone.”
Severstal also sees its improved self-service digital channel as a marketing advantage. “The sales rep doesn’t always have enough time to talk to customers about new products,” he says. “But the web channel is a good promotional tool; we can quickly put new product information online.”
“The main idea is to create a superior client experience,” Romanovskiy says. “When we talk with our clients, the online digital experience is a big part of their expected experience—and it increases every year. So we have to develop our digital sales channel.”
Moreover, Severstal realizes it must provide a digital buying experience that appeals to customers across international markets, he adds. Severstal’s e-commerce site now offers content in Russian and English, and will add to its multilingual options for Europe next year.
“We’re not competing in the metals industry with just Russian metal producers—it’s international,” he says. “We’d like to create the best digital experience internationally.”
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