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Essar Steel wants to emulate the success of online retailers Flipkart and Snapdeal and sell building materials to the construction and infrastructure industry.
The company has launched eHypermart, an online market place for selling steel produced by the company and also value added steel products produced by its customers.
Besides it will also retail cement, paints, cutting tools, wires and cables, material handling system and generators produced by other companies.
It has already registered 3,000 customers and is looking at 1,000 certified vendor partners this fiscal.
Essar Steel expects sales turnover of $100 million (Rs 630 crore) in the first year of operation by introducing nine product categories over the next three months.
Vikram Amin, Executive Director (Strategy and Business Development), Essar Steel said transparency on pricing of products would attract customers to this portal, and bulk buyers would also enjoy concessions.
Denying that the initiative was in conflict with its dealers’ interests, he said the portal was an attempt to open up a new sales avenue for them as the delivery would happen from the nearest dealer’s location where the goods are available. Of the 6,000 towns in India, Essar Steel has a presence in 350 towns.
Hypermart accounted for 25-30 per cent of the total retail sales of 3.5 million tonnes last fiscal.
It expects the eHypermart to channel 30 per cent of the retail sales in this fiscal.
The company plans to adopt a flexible delivery model of letting the vendors handle their delivery or passing it on to Essar.
For every deal executed on the platform Essar would get a fixed commission. Typically, the dealers sales commission in the steel industry varies Rs. 1,000-2,000 a tonne.
Essar Steel has tied up with 38 banks for handling online payments and does not expect rejection at time of delivery as the goods will be moved only after the payment is made.
Customers also have the option to pay offline. Going ahead, the company plans to add a separate section on service support including latest development in different sectors.
Essar Steel expects production to nearly double to six million tonnes (3.5 mt) this fiscal with the six million tonne per annum pellet plant going on stream at Paradeep in Odisha.
It foresees cheap steel imports from China, Japan and Korea to slowdown in coming months with prices in exporting countries moving up.
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