Younger American industrial buyers source more items direct from manufacturers or from online marketplaces and more frequently internationally than older counterparts, according to a new UPS survey.
Millennials are also ready to trust social media and are more concerned about issues such as sustainability than quality and price, the fourth UPS Industrial Buying Dynamics study revealed.
In short, as the demographics of industrial buyers shift, businesses must adapt to accommodate evolving customer demands and preferences by offering faster, more customer-focused services, UPS stated. The study is based on a survey of more than 1,500 buyers in the United States between 22 and 70 years of age who purchase industrial parts, products or supplies for use in 15 industries.
“The rise of Millennials in the workplace ushers in a new era that challenges long-standing industry norms,” said Brooke Yamini, Vice President of Marketing Operations at UPS. “Not only do these young, tech-savvy customers want orders delivered quickly, they are also influenced by additional services and post-sales support.”
UPS said the study revealed four ways these new buyers are shaking up the industry.
The first is ‘Shifting Demographics’. Millennials made up 38% of this year’s survey respondents, an increase of 10 percentage points from 2017. This growing generation of buyers is less loyal to tradition, often preferring to conduct research via social media rather than contacting a sales representative. Millennials also tend to consider factors including sustainability and after-sales support over more traditional factors like quality and price, the survey showed.
However, despite their growing influence, Millennial buyers are still more restricted in what and how much they can buy versus the more experienced Baby Boomer generation, UPS noted.
The second trend is ‘Shifting Procurement Patterns’. Buyers continue to shift spending, purchasing directly from manufacturers or online marketplaces, the UPS survey showed. Millennials show a growing preference for buying directly from manufacturers — an increase of almost 20% in the past two years. During the past two years, distributors saw a 15% decrease in purchase share to 38%, while manufacturers and online marketplaces have grown 10% and 17%, respectively.
Thirdly, there is a ‘Shifting International Sourcing’ trend with robust international sourcing on the rise. Millennial buyers say they order nearly half their products internationally – far more than Baby Boomers or Generation X buyers. Survey respondents are also willing to pay more for faster service across borders — 26% expect orders in two days, while 81% say their orders sometimes require same-day delivery.
Finally, respondents report ‘Shifting Post-Sales Support’. Assistance after a sale continues to be an important component of business deals. While this trend is growing across all buyer generations and product groups, Millennials’ need for flexibility influences this shift. In fact, 87% of Millennials indicated they are likely to shift their business to attain better post-sales support in the next three to five years.
For manufacturers, online markets and distributors, the message is clear, UPS said. “Industrial buying in 2019 requires greater analysis and customization than in the past. Knowing the buyer — age, background, etc. — now matters more,” the company concluded.
