B2B Payments

Online’s Impact on B2B Purchasing

Thirty-four percent of industrial suppliers have gone outside of their traditional networks to make purchases, according to a new UPS survey of industrial purchasing. Product availability and pricing are certainly big drivers, but so is easy of payment, often trumping decades old relationships in the process.

Years ago, industrial distribution was dominated by family-owed companies and distribution was built on generations of personal relationships. Now, as the industry moves online, the marketplace has changed and competition has intensified.

In a recent survey of 1,500 industrial supplies purchasers in the US, a broad view of the mindset of industrial supplies buyer’s mindset was examined. The UPS B2B Purchasing Insights survey focused on five key factors of the purchasing process: researching and selecting suppliers, purchasing, website features and functions, delivery and returns, and post-sales service and support.

As expected, the quality, availability and price continue to be important factors when picking a supplier. It was easy to see in this area how quickly the industry has moved online, now that more than half of the buyers are making their purchases online and one-third of buyers reported that they spend the majority of their budgets online. In addition, e-commerce is having an impact on buyer-suppler relationships and 34% of buyers say they’ve gone outside of their supplier base to find a new vendor. Obviously, having an easy way to make that payment goes hand in hand with the value derived with transacting online.

For purchasing, online is the preferred method, but there still is still a preference for phone, fax and placing orders directly through sales representatives or emails. The study also found that the majority of buyers are making a combination of repeat and one-off purchases, underling the chance for suppliers to have many opportunities to acquire new customers.

For 67% of buyers, the ability to order through a supplier’s website is considered very or extremely important. While the move to online is still strong, many suppliers still rely on traditional methods when researching and ordering, which could be due to the complexity of B2B purchasing including negotiated pricing and procurement policies as well as payment processes which do not support an easy method of payment online. Buyers commented on areas for improvement in the online buying experience, specifically they looked to have better visibility into real-time product availability and the ability to enable easier transacting.

Regarding shipping and returns, the majority of all surveyed buyers saw shipping and delivery factors as very important in the purchase process. Buyers continue to look for an integrated and seamless purchasing experience. For suppliers to remain competitive they should make their online and offline purchasing systems integrated with order management, inventory, e-commerce, billing and returns processes.

One of the biggest potential differentiators that helps suppliers stand apart from competitors is providing better access to post-sales service and support. When looking to purchase from a new vendor, buyers consider website support to be an important factor and it is important that vendors develop their websites past “online catalogues”.

The report found that while buyers still seek phone support and may be working from decades-old supplier/buyer relationships, the industry is changing and turning to online channels. It is important for suppliers to continually advance and improve the online buying experience, where the B2B Purchasers increasingly have an advantage.

As Brian Littlefield, industrial distribution director at UPS summarized “sales representatives and other methods are still in demand, but the study shows B2B and B2C purchasing habits are becoming more similar. The findings underscore the need for industrial suppliers’ e-commerce sites to offer a positive customer experience, much like B2C companies”.

 

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