Atlanta, GA — A new report from UPS finds generational buying preferences are changing the traditional industrial model.
As the demographics of industrial buyers shift, businesses must adapt to accommodate evolving customer demands and preferences by offering faster, more customer-focused services, according to the company’s fourth UPS Industrial Buying Dynamics study, which revealed how a new wave of buyers is shaping the industrial buying landscape today.
“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.”
The UPS study revealed four ways these new buyers are shaking up the industry.
Shifting Demographics. Thirty-eight percent of this year’s survey respondents were Millennials, 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. 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.
Shifting Procurement Patterns. Buyers continue to shift spending, purchasing directly from manufacturers or online marketplaces. Millennials show a growing preference for buying directly from manufacturers — an increase of almost 20 percent in the past two years. During the past two years, distributors saw a 15 percent decrease in purchase share to 38 percent, while manufacturers and online marketplaces have grown 10 percent and 17 percent, respectively.
Shifting International Sourcing. Robust international sourcing is 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 percent expect orders in two days, while 81 percent say their orders sometimes require same-day delivery.
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 percent 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: Industrial buying in 2019 requires greater analysis and customization than in the past. Knowing the buyer — age, background, etc. — now matters more.
The 2019 U.S. Industrial Buying Dynamics 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.