Bangkok--25 Mar--Ogilvy Public Relations
Industrial distributors have to improve their websites to remain competitive as majority of purchasers in Asia (86%), Europe (75%) and the United States (72%) are likely to shift spend to distributors with user-friendly websites. This is one of the key findings of the Industrial Buying Dynamics study commissioned by UPS (NYSE: UPS), which surveyed 2,821 purchasing professionals in Asia , Europe and the United States (US).
Across Asia, though many purchasers are buying from local industrial distributors, there is a window of opportunity for international distributors to expand to these markets by leveraging e-commerce. Asian purchasers are increasingly willing to buy from more suppliers; though this desire is more pronounced in China (57%) and South Korea (32%) than Japan (18%).
Other key observations include having more customers directly purchasing from manufacturers, a growing trend in online purchasing, and high demand for efficient shipping. These trends pose a different set of challenges to distributors.
Customers bypassing distributors
Many industrial customers are purchasing directly from manufacturers and the trend is set to increase. The study found that 65% of purchasers in Europe are already bypassing industrial distributors followed by the US (64%) and Asia (55%). In Asia, the trend is set to grow as 77% of those who are not buying directly from manufacturers are likely to start doing so.
"E-commerce has levelled the playing field for manufacturers to access buyers directly, potentially cutting out distributors. Buyers are also drawn towards manufacturers that provide high levels of technical support," said Rob Houck, Vice President of Marketing, UPS Asia Pacific Region. "As this trend is likely to grow, distributors need to differentiate themselves by capitalizing on their ability to support a variety of products, and provide solutions to the customers. This includes providing more personalized service through sales representatives, and reviewing ways to deliver products more efficiently."
Online purchasing for industrial supplies likely to increase
Purchasers are increasingly buying industrial supplies online, and China leads the markets with 82% of purchasers already doing so, followed by Korea (69%) and Japan (56%). The trend is likely to grow as 87% of respondents in Asia are likely to increase purchases made online. The same trend can be observed in the US and Europe where industrial customers spend most of their purchase budget online with further growth expected.
Among Asian respondents who are not buying through online channels, difficulties in identifying product details (46%) and getting answers to product-related questions (41%) were cited as top barriers to online purchasing. Findings from the US and Europe revealed similar gaps in service. The absence of individual negotiated pricing was also cited as one of the factors which prevents buyers from the US and Europe from purchasing online.
"China, Japan and South Korea are among Thailand's top export markets, amassing a total export value of almost US$50 billion in 2015. But as the economic environment is expected to become more competitive, Thai industrial exporters and distributors have to be cognizant of current trends and adapt to it," said Boon Tiam Tan, Managing Director of UPS Thailand. "As more industrial purchasers buy online, local Thai businesses will need to provide a superior e-commerce platform by leveraging end-to-end e-commerce solutions and offering personal touch points at every step of purchasers' buying experience."
Shipping capabilities influencing the decisions made by Asian purchasers
The shipping capabilities of a distributor have an impact on the decisions made by Asian purchasers. In China, where the country is vast and the logistics infrastructure is still developing, 50% of the purchasers take into account the speed of delivery when choosing a distributor, compared to those in Japan (45%) and South Korea (31%). Having a range of shipping modes also appeals to more Chinese purchasers (29%) than Japanese (12%) and Korean (17%) purchasers.
Distributors today face increased expectations in having to optimize the distribution process and achieve the cost objectives. Almost eight in 10 respondents in Asia said it is important to offer single carrier shipping, yet only 21% of their distributors offer it.
"Purchasers today are looking for distributors who can offer them greater value beyond pricing and quality. And it is clearly becoming more important for distributors to be able to deliver their goods in an efficient manner. Consolidating orders with a single carrier is one way distributors can help purchasers create economies of scale, and streamline the shipping process," Tan added.