The scrap industry doesn't get a lot of attention. Think about it: the word "scrap" is defined as wasted, discarded materials that have been rejected or discarded in the manufacturing process. All in all, it's not a very attractive industry.
Scrap is hardly glamorous but it's actually a multi-billion dollar industry that is a huge contributor to the recycling industry worldwide. In 2011 it was reported the scrap industry supported over 460,000 U.S. jobs and generated more than $90 billion in economic activity. Traditionally, scrap recycling works when a buyer visits a scrap yard and has the materials delivered to an actual recycling plant. But entrepreneurs are looking to change how the scrap industry is operated with digital innovation.
Take ScrapGo for example. They are America's first online scrap yard, helping scrap yards of all sizes, manufacturers, buyers and sellers across the country to sell scrap more efficiently. Using proprietary technology, ScrapGo tracks prices, supply and demand, capacity and equipment at scrap yards to help buyers make smarter purchasing decisions.
"We're levelling the playing field for small, mom-and-pop type operations so they can compete with their bigger competitors instead of being controlled by them," says Dale Turken, President of ScrapGo. "We not only give these market participants direct access to mills, foundries and other specialized buyers, which instantly gets them more money for the scrap they're already producing, we also pay them fast so they can keep building their businesses."It's all about changing how sellers access potential buyers and making information about scrap prices and trends available to the public.
Innovation in the scrap industry comes at an interesting time - scrap earnings in the U.S. aren't what they used to be and many businesses blame overseas economies for the decline in exports. As the American dollar grows stronger, it's become pricier for recycling plants in places like China and other markets to buy American scrap. Since 2011, U.S. exports of scrap materials have fallen 36% and prices have plummeted.
But the recycling industry is an enormous field that influences many other international industries and hasn't seen much in terms of new innovation. "The scrap recycling industry isn't at the top of many people's radars," says Turken. "It's an enormous industry with some very large players at the top of the supply chain and thousands of small players at the bottom." A huge problem plaguing many recyclers is the lack of integrated technology making the buying and selling process simpler. "We saw an opportunity to come into the industry, apply technology and change how small and medium sized players compete," says Turken.
ScrapGo connects an otherwise fragmented industry - the ScrapGo strategy gives sellers access to markets they don't usually do business with and brings customers new materials they wouldn't normally find. Normally, scrap businesses are localized and it's difficult for buyers to purchase materials cross-country because of high transportation costs. Digitizing the recycling industry helps to advance not only current scrap metal businesses but it also benefits the overall mission of increasing our country's commitment to recycling.
The Internet is full of questionable transactions, so in order to maintain the highest quality of business, ScrapGo has vetted all of their sellers registered in their system and has inspected the materials listed for sale. They've also partnered with national freight carriers to help keep transportation costs low, maximizing the profit for the seller and helping buyers keep costs low. And ScrapGo keeps their costs low by managing business all online. With everything on the web, ScrapGo doesn't pay real estate costs because they don't have to hold on to the scrap material.
Traditional industries like scrap recycling are prime for disruption as technology improves business efficiency. The Internet has already changed how we shop for everyday items and even groceries - technologies like Amazon and InstaCart have influenced consumer shopping behaviors by moving everything online. The scrap industry is a huge business that is international and ScrapGo has the potential of connecting a multi-billion dollar industry by making it easier for all participants to get involved.