Changing Industrial Buying Patterns
In a recent survey of 1,500 B2B buyers, UPS discovered some startling trends in industrial procurement. In comparison to Boomers, Millennials are dropping distributors as industrial vendors and increasingly choosing to buy direct from manufacturers’ e-commerce channels.
In this article, we’ll unpack this finding (and others) from the UPS survey. In each case, we’ll apply the data from the survey with a direct takeaway for manufacturers.
1. Millennials make the largest portion of their purchases (38%) directly from manufacturers
This might come as a surprise to manufacturers, but Millennials would rather buy directly from you than from a distributor.
UPS put it this way in their interpretation of the survey results:
“Millennials show a growing preference for buying directly from manufacturers; our data reflects an increase of almost 20 percent over 2017 survey results. This buying preference comes mostly at the expense of distributors, who continue to lose purchase share to manufacturers and online marketplaces.”
Here’s how the vendor preferences of respondents break down by age demographic:
- E-marketplace—30% of purchases
- Manufacturer—38% of purchases
- Distributor—32% of purchases
- E-marketplace—27% of purchases
- Manufacturer—35% of purchases
- Distributor—38% of purchases
- E-marketplace—25% of purchases
- Manufacturer—29% of purchases
- Distributor—46% of purchases
Millennials would rather buy directly from manufacturers. But as we’ll see in a moment, they’re not interested in traditional sales channels like phone, fax, and email. Rather, they want a convenient digital buying experience.
In fact, it’s one of the key things they consider when evaluating a supplier.
2. As digital natives, Millennials evaluate suppliers in ways Boomers and GenXers never did
As UPS reports in the survey results, Millennials are more likely to choose suppliers based on things like ease of mobile phone ordering and post-sales support.
This stands in stark contrast to Boomers, who are more likely to choose suppliers based on things like product variety, product availability, and shipping speed, among other factors.
In other words:
- Millennials focus on digital customer experience when choosing a supplier.
- Boomers focus on product value when choosing a supplier.
Manufacturers without a digital customer experience (and those with lackluster digital experiences) stand to lose out as more and more Millennials enter B2B purchasing roles. Obviously, product value will still be essential to retaining business from Millennial buyers—but for them, it doesn’t the clout to win business which it does with Boomers.
3. Industrial buyers of all demographics would rather buy direct from manufacturers…
So what do buyers think of you, as a manufacturer?
When asked which kind of supplier delivers excellence in several areas, respondents overwhelmingly indicated that manufacturers offer much higher product quality, post-sales support, and good reputation than online marketplaces and distributors. (Go download the survey results for the full picture).
For organizations which traditionally haven’t focused on the buying experience of their end users, these preferences may come as a surprise.
Indeed, the findings are challenging, but manufacturers should embrace the challenge. This is yet another indication that the field is ripe for manufacturers who want to sell directly to their end users—and the best way to do that is through a web channel.
4. …but manufacturers’ difficult online ordering experiences are holding back purchases from all demographics
While survey respondents indicated a strong faith in the overall value of manufacturers (as opposed to distributors), respondents also indicated dissatisfaction with manufacturers’ buying experiences.
Specifically, buyers want less friction in manufacturers’ web channels.
Survey respondents indicated that when it comes to the ease of placing an online order, manufacturers lag behind online marketplaces (1st) and large distributors (2nd) for ease of placing orders online, both on desktop and mobile. (Go download the survey results for the full picture).
The challenge for manufacturers is to pick up the ball and run with it.
As we saw in the 3rd finding, professional buyers, particularly Millennials, are already more invested in (and trusting of) manufacturers than distributors. They would rather buy from manufacturers directly. However, professional buyers consistently find distributors and online marketplaces easier to buy from.
The takeaway is simple, really. Millennials want to buy direct from manufacturers, but manufacturers tend to make that unnecessarily hard. Manufacturers have untapped brand equity which they can only unlock when they launch a web channel. The next step for manufacturers is to adapt to the shift in industrial purchasing and start selling online.
Moving forward: FREE case study
Wondering what it looks like when a manufacturer gives buyers the web channel they want? Download this case study on Mannington Mills. You’ll learn how this leading manufacturer of flooring added a catalog with rich content to their web portal and grew sales 150%.
FREE Case study: 150% Sales Growth with Rich Content
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