Three strategies for distributor differentiation

Industrial distributors may be getting better at online selling but they’re facing new headwinds, according to the third UPS Industrial Buying Dynamics study of 1,500 industrial products buyers.

The latest findings show a startling jump in the share of buyers who have purchased industrial products from e-marketplaces—75 percent in 2017 compared to just 20 percent in 2013. Eighty-one percent have purchased directly from manufacturers today compared to 64 percent in 2015. Perhaps most significant is that 38 percent of millennials—buyers between the ages of 21 and 34—have made a purchase for business using a mobile device, compared to 30 percent of all surveyed buyers.

These and other findings in the study underscore that sellers need to find ways to stand apart from a growing list of competitors. The following strategies could help.

1.) Jump-start your customers’ digital experience

Buyers accustomed to features on websites or mobile applications that make personal purchases easier are bringing higher expectations to their business-to-business purchases, too. Yet few small or midsize businesses have the in-house staff needed for a state-of-the-art digital buying experience. The UPS study, however, shows hesitation can be costly, as 80 percent of industrial products buyers say they’d switch suppliers for a more user-friendly website.

Simon Bhadra, senior manager of UPS Industrial Distributor Segment Marketing, points to both out-of-the-box and customizable technology solutions that can help companies gain more traction on improving the user experience they provide to customers across every channel.

Bhadra explains, “We frequently help pair customers with technology partners in the UPS Ready^® program who can help with anything from tech consulting through software integration, e-commerce and even mobile application development.” He adds, “It’s amazing the way some very complex problems can be solved with an existing software solution.”

2.) Tailor services to buyer characteristics and product type

Standardizing and repeating processes is an enduring practice for good reason—it helps reduce costs and prevent errors. But that strategy may not pay the dividends it once did. This year’s UPS study looked at how buyer needs differ by the types of products they primarily buy, by preference for a certain type of supplier and by age group. The results show a one-size-fits-all service approach is now less likely to fit all.

Over two-thirds of millennials said they would shift share to a supplier with mobile purchasing, compared to 47 percent of all buyers
Millennials have the highest expectations for post-sales services, with returns topping the list of expectations for all buyers (82 percent)
Maintenance, repair and operations (MRO) and original equipment manufacturer (OEM) parts buyers are more likely to shift share to a supplier that offers 3D printing and insurance on shipping
Buyers of janitorial and sanitation products are more likely to order via mobile

The upshot is that suppliers face a Rubik’s Cube-like puzzle when trying to align customer needs with the right services and service levels.

Charlie Covert, vice president of UPS Customer Solutions, explains why tailoring service offerings, or enhancing them, doesn’t necessarily require a big capital outlay. “It’s important to tap into the intellectual resources of your trading partners, your suppliers and logistics providers. The outside perspective can be invaluable and often leads to very creative solutions.” He adds, “Also consider the added-value services they offer, such as contract warehousing and distribution or post-sales services and 3D Printing. That’s often a great way, and a faster way, to test certain approaches without building out your own infrastructure.”

3.) Make time to envision the future

Author and futurist Alan Toffler wrote that “Change is the process by which the future invades our lives.” Indeed, few businesses likely were prepared for the collision of advancing technology with buyer behavior. More change will come with the likes of instant order buttons, digital home assistants and autonomous equipment and vehicles. It’s only a matter of time before those and other technologies find their way into the workplace.

In fact, global research firm Forrester predicts that B2B e-commerce will be just over twice the size of B2C e-commerce by 2020. And data from the UPS Industrial Buying Dynamics study seems to support that prediction, with increasing numbers of buyers choosing digital and mobile channels to make purchases.

“There are very few business models in operation today that look exactly as they did 100 or even 50 years ago,” says Alan Amling, vice president of UPS Corporate Strategy. He adds, “The world is always changing, and winners and losers are separated by how they respond to change. Get ahead of it. Embrace it, so when it happens, you’re on the right side of that change.”

Learn how to get ahead of the changes in industrial buyer behavior. Download the Industrial Buying Dynamics study.