Executive Briefings

Upended Business Model Brings New Opportunities to Industrial Distributors, Study Finds

Industrial distributors are facing changing market conditions that are challenging their long-standing business models, according to a study conducted by research firm TNS on behalf of UPS.

Findings of the Industrial Buying Dynamics study reveal that buyers are increasingly willing to purchase outside of their existing supply base. Some 38 percent of online industrial product buyers sourced products from a new supplier (versus 34 percent in 2013), and 72 percent said they would shift spending to a distributor with a more user-friendly website.

“Customer loyalty today is built on a different foundation than the one distributors have built over generations,” said Brian Littlefield, UPS director of industrial manufacturing and distribution marketing. “Once price and quality standards are met, buyers are willing to explore vendors that better fit their needs, whether for a more convenient website, a better price or simply someone who quickly answers product questions.”

The UPS study revealed four market forces impacting distributors and provides insights that can help them identify and address their strengths and weaknesses.

1. Increasing buyer expectations requires a more integrated and user-friendly purchase process

2. Growth of direct-from-manufacturer purchasing and online marketplaces

3. The universal acceptance of, and demand for, B2B e-commerce

4. Meeting the purchasing habits of millennials as they become the next generation of purchasing leaders

How distributors can best respond to changing customer demands for product variety and knowledge, convenience and delivery speed, and competitive price varies by market niche. The study found, for example, that buyers are least satisfied in the areas of added-value services (25 percent) and physical locations (30 percent).

Additional findings and insights are available in the UPS Industrial Buying Dynamics executive summary, which can be downloaded, click here.

Source: UPS

Findings of the Industrial Buying Dynamics study reveal that buyers are increasingly willing to purchase outside of their existing supply base. Some 38 percent of online industrial product buyers sourced products from a new supplier (versus 34 percent in 2013), and 72 percent said they would shift spending to a distributor with a more user-friendly website.

“Customer loyalty today is built on a different foundation than the one distributors have built over generations,” said Brian Littlefield, UPS director of industrial manufacturing and distribution marketing. “Once price and quality standards are met, buyers are willing to explore vendors that better fit their needs, whether for a more convenient website, a better price or simply someone who quickly answers product questions.”

The UPS study revealed four market forces impacting distributors and provides insights that can help them identify and address their strengths and weaknesses.

1. Increasing buyer expectations requires a more integrated and user-friendly purchase process

2. Growth of direct-from-manufacturer purchasing and online marketplaces

3. The universal acceptance of, and demand for, B2B e-commerce

4. Meeting the purchasing habits of millennials as they become the next generation of purchasing leaders

How distributors can best respond to changing customer demands for product variety and knowledge, convenience and delivery speed, and competitive price varies by market niche. The study found, for example, that buyers are least satisfied in the areas of added-value services (25 percent) and physical locations (30 percent).

Additional findings and insights are available in the UPS Industrial Buying Dynamics executive summary, which can be downloaded, click here.

Source: UPS