A Look at Industrial Buyer Trends: E-Marketplaces, Mobile Apps and Supplier Selection

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Traditional distributors still command the biggest percentage of industrial buyer spending, but competition is firing up, according to a recent UPS study of industrial products buyers and their behaviors and preferences.

The study found more that industrial buyers than before are spending their money with non-traditional suppliers by buying through an e-marketplace or straight from the manufacturer.

For the 2017 U.S. Industrial Buying Dynamics Study, UPS surveyed 1,500 U.S.-based buyers representing 16 different industries. The purchases that they make fall into the five following categories: equipment; final assembly OEM parts; MRO parts; consumables/raw materials; and janitorial and sanitation. Purchase category is affiliated with certain factors in supplier selection.

Although the largest share (45%) of industrial buyer spending still goes to traditional distributors, 81% of the surveyed buyers also purchased directly from manufacturers, compared with just 64% two years ago. Whereas only 20% of buyers made purchases through e-marketplaces in 2013, that percentage is 75% in 2017.

The report authors make the conjecture that industrial products buying will be dramatically affected by the habits of millennial buyers, who are gradually moving into leadership roles. Compared with their older counterparts, millennial buyers have shown a greater inclination to purchase from e-marketplaces. The top three reasons buyers cited for purchasing from e-marketplaces were free shipping, price and quick response to order.

Supplier Selection By Product Category

UPS looked at how buyers of products from the five aforementioned categories select suppliers. “As expected, product quality, best value and best prices remain essential to buyers in all product categories,” the report authors wrote. “Those foundational needs aside, the criteria driving supplier selection vary.”

Good product warranty was cited by buyers of four of the categories. Buyers of MRO parts and final assembly OEM parts named customized products as a critical factor. Having good product selection was an important factor for buyers of equipment and consumables/raw materials. Buyers of janitorial and sanitation products named reliable delivery time and free shipping as important.

Buyer preferences for distributors, e-marketplaces or manufacturers did not vary much by category. Janitorial and sanitation buyers were more likely to prefer e-marketplaces, which makes sense given that free shipping was one of their top supplier selection criteria.

Source: UPS Industrial Buying Dynamics Study

Product category also affects where buyers are likely to find suppliers. In this study of U.S. buyers, most sourced from U.S. suppliers. The products most likely to be sourced from outside the U.S. were MRO and OEM parts, and the report also found that quality was the most-cited reason for sourcing from abroad.

Going Mobile is Crucial

One important takeaway from the report is that having a mobile channel is crucial for staying competitive. Sixty-nine percent of millennial buyers surveyed said that they are likely to favor suppliers with mobile purchasing capabilities, and nearly half of all buyers said so.

It’s tempting to make a joke about smartphone-obsessed millennials here, but having a mobile channel means that buyers can have access to order history at their fingertips. Mobile also makes transactions (and repeat orders) easier and faster.

Source: UPS Industrial Buying Dynamics Study

As for finding new suppliers, forget the sales rep. Nowadays, when “googling” is an action, young buyers prefer to learn about suppliers from search engines, company websites and social media. Hence, a good user interface is a must-have. Four out of five buyers surveyed said they are more likely to purchase from a supplier with a user-friendly website.

In short, changes are afoot in the industrial buying world, as a younger generation of buyers shift spending to non-traditional suppliers offering flexible purchasing options. Suppliers can try to stay competitive by improving the transaction experience for increasingly tech-savvy buyers and staying on top of trends transforming the industry.

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