Internet Trading Prepares for Chapter Two

With the failure of most Internet trading sites for the recycling and paper industries in the past 12 months, Chapter Eleven has been the most common literary reference within the e-commerce segment of the recycling industry.
But speakers at a session on e-commerce at the Paper Recycling Conference and Trade Show, held in late June in Chicago, seem to agree that a second chapter is about to begin in the Internet trading of recyclable commodities.
Referring to the disappearance of “dot-bombs” and “dot-deads,” Jan Marrs of ForestExpress, Atlanta, said “the dust is settling [and] people are using the Internet more on a daily basis.”
ForestExpress, funded jointly by several of the largest paper companies, is preparing to roll out its scrap paper trading format this fall. Through its Web site, the company hopes to host a number of scrap paper transactions between scrap paper packers and brokers and consuming mills.
John Daniel, of Enron Industrial Markets, Houston, offered his view that bulk scrap paper commodities—such as old corrugated containers (OCC) and old newspapers (ONP)—were ideal for Internet-based trading, but that specialty grades are better handled by existing methods.
Daniel says Enron is concentrating on those bulk grades and is taking an approach different from many of the closed-down dot-coms by acting as both a buyer and seller on its site and by owning physical assets in the paper recycling industry.
He noted that buyers and sellers are beginning to respond to the Web site, sometimes telephoning to finalize transactions based on the pricing they see on the screen. Enron, with substantial assets and broader operations, can afford to wait for traders to get used to dealing with its online methods, said Daniel. He added that Enron’s online natural gas brokers are now conducting more business than New York Mercantile Exchange brokers of that commodity.
John Robb of RecycleNet Corp., Guelph, Ontario, Canada, proudly assumed the role of the small business person on the panel. Robb noted that RecycleNet started as a print publication that listed recyclable commodities—often material odd lots—for sale to other recyclers. The company transferred that concept online and has slowly built a business as an online bulletin board for recyclers.
He remarked that one reason RecycleNet has stayed solvent while so many others have come and gone is that, “We spend less than we make. Anybody who doesn’t do that, and who gets money from an artificial source and then spends through that, is dead.”
Robb criticized the methods of several of the failed businesses. “We focus on a very small portion of e-commerce—sales and marketing. If you’re in business today, that means you already have a methodology. We’re not out to change that. We’re not in the middle of the transaction.”
Taking one last shot at the now defunct trading sites, Robb said they “didn’t have a business to begin with,” and that there could be “no such thing as a pure-play Internet company. Once Amazon began doing business they needed warehouses; that’s overhead.”