UPS B2B Purchasing Insights: Behaviors, preferences and perceptions of industrial supplier performance

UPS B2B purchasing insights: Behaviors, preferences and perceptions of industrial supplier performance n=302 n=197 n=104 n=82 n=81 n=66 n=61 n=63 n=53 n=42 n=47 n=31 n=29 n=10 n=333 General Manufacturing/processing Contractor/service Provider Residential Construction Commercial Construction Hospital/healthcare Automotive Energy Government/military Hospitality OEM (Original Equipment Manufacturer) Utilities Aerospace Machine Shop Mining Other 13% 20% 7% 5% 5% 4% 4% 4% 4% 3% 3% 2% 2% 1% 22% industry base Buyer Commodity manager Contract manger Maintenance manager/supervisor Materials manager owner/principal Procurement manager/director/officer Purchasing manager/director/officer Sourcing manager/director/officer Supply Management director/supply chief Other n=101 n=60 n=100 n=176 n=92 n=533 n=100 n=146 n=23 n=58 n=112 7% 4% 7% 12% 6% 36% 7% 10% 2% 4% 7% career base UPS B2B Purchasing Insights Study | April 2014 2 Introduction Industrial distribution, once dominated by family-owned companies built on generations of personal relationships, has undergone a quiet but dramatic renaissance. Vendor reduction initiatives, widespread mergers and acquisitions and the inevitable growth in online selling have intensified competition for available dollars. The UPS B2B Purchasing Insights Study, conducted in partnership with research firm TNS, is designed to shed light on factors driving the purchase decisions of those who buy or influence industrial supplies purchases. Touching on both current and intended purchase behaviors, the study offers distributors a glimpse into their competitive position in the marketplace as well as potential areas for growth. Methodology TNS conducted an online survey of 1,501 industrial supplies purchasers in December 2013. Respondents included sole/joint decision makers or strong influencers of sourcing and purchasing decisions. Survey respondents purchase catalog or stock-type products (not custom-made items) from a predefined list of product categories representing a wide range of industries. Purchasers with annual spending levels on industrial products of less than $50,000 (n=680), $50,000 to $250,000 (n=504), and more than $250,000 (n=317) were included in the study. Factors such as age, tenure as a buying professional and size of supply base were also studied. Demographic differences are provided where the findings were significant and useful. career experience 23% 33% 3% 40% Less than 1 year 1-5 years 5-10 years More than 10 years UPS B2B Purchasing Insights Study | April 2014 3 Executive Summary The UPS Purchasing Insights study, a broad view of the industrial supplies buyer’s mindset, studies customer perceptions across five key factors of the purchasing process. Researching, selecting and purchasing behavior are in transition As expected, factors considered important in choosing a supplier and making a purchase are dominated by enduring features such as product quality, availability and price, followed closely by shipping, delivery and returns capabilities. Yet, it’s interesting that only half of purchasers say having a catalog and having a sales representative are important to their supplier decisions. That is not to suggest that catalogs and sales representatives aren’t important to the purchase process, because they are, but it does signal that the wants, needs and actions of industrial supplies buyers have taken a noticeable turn. Readers may be most surprised to learn how quickly web-based research and purchasing has grown, with more than half of buyers now making some of their purchases online. One-third of buyers spend most of their budgets online. Buyers report that the majority of their suppliers have websites that offer online ordering. And, it can be argued that e-commerce is having an impact on buyer-supplier relationships -- 34% of buyers say they’ve gone outside of their existing supply base to make an online purchase with a new vendor. For suppliers, finding strategic ways to be in the right place at the right time is the key to retention and growth. But perhaps one of the most unexpected findings is how very satisfied buyers are with their current suppliers’ capabilities in all the areas they consider most important to the supplier selection process. This is great news for distributors in good standing with their customers, and perhaps concerning to those looking to expand a customer base. Key factors of purchasing process Researching and Selecting Suppliers Purchasing Website Features and Functions Delivery and Returns Post-sales Service and Support5 UPS B2B Purchasing Insights Study | April 2014 4 But perhaps one of the most unexpected findings is how very satisfied buyers are with their current suppliers’ capabilities in all the areas they consider most important to the supplier selection process. This is great news for distributors in good standing with their customers, and perhaps concerning to those looking to expand a customer base. A common need - integration Taking a big picture view of the findings reveals a common thread: the capabilities buyers rank most important require greater integration of a seller’s systems and processes – inventory, shipping and returns – in order to provide a more competitive and satisfying customer experience. For example, data suggests that offering real-time product availability, negotiated pricing and shipping costs into the online purchase experience may help to fill a need for many buyers. The results that follow help to reveal windows of opportunity for distributors seeking to retain and even grow their businesses. The findings suggest that suppliers who are not yet meeting their customers’ purchasing demands must act quickly to remain competitive and grow. Inventory Shipping Returns UPS B2B Purchasing Insights Study | April 2014 5 Factors Affecting Supplier Selection Selection criteria While the vast majority of buyers rank product-related features as important when selecting a supplier, more notable is that delivery and returns capabilities, along with the ability to buy on a supplier’s website, are important to more buyers than having a sales representative and having a printed catalog. The findings presented ahead show that sales representatives and catalogs are still important and relevant to the supplier research process, but the data does signal a shift toward less traditional methods of research. Diving more deeply into the selection requirements shows that more higher-spending buyers assign importance to supplier websites, sales representatives, catalogs and added-value services. They also rely more on word-of-mouth recommendations from coworkers and peers. Figure 1: Important Criteria When Selecting Suppliers Base: All respondents - n=1,501 How important are the following when deciding which industrial supplies vendors to purchase from? ? top -2 box Very Important Extremely Important 31% 32% 32% 34% 33% 35% 39% 35% 35% 34% 37% 38% 34% 28% 31% 27% 25% 23% 24% 26% 25% 36% 34% 31% 36% 39% 41% 41% 42% 50% 63% 61% 66% 70% Printed / hardcopy product catalog Online reviews of the supplier Having a sales representative Word-of-mouth recommendations from coworkers or peers Having a nearby physical location where I can purchase or pick up Payment options The supplier’s website overall Value-added services, such as repairs, training or technical support Ability to make purchases on the supplier’s website Contract / negotiated pricing Product catalog / product information on supplier website Return policies and procedures Shipping costs Delivery when products are needed Product price Product availability Product quality 54% 56% 58% 59% 69% 69% 70% 71% 74% 75% 78% 80% 84% 91% 92% 93% 95% Higher spending firms place greater importance on suppliers’ websites, as well as traditional offline criteria, including value added services, sales reps and printed catalogs. * Respondents asked to rate “Extremely Important” attributes first followed by “Very important” up to a maximum of five attributes. Attributes randomly selected if more than five, prioritizing “Extremely Important” attributes. UPS B2B Purchasing Insights Study | April 2014 6 Supplier performance on selection criteria/attributes Buyers indicate their suppliers are performing very well on all the criteria important to selecting a vendor. No meaningful differences could be found among the three annual spending levels. At the same time, this raises a chicken or egg question. Are industrial suppliers, in general, performing well across the board? Or, are buyers choosing to work with vendors who better meet their needs on all these criteria? Regardless of the answer, the performance standard for suppliers is quite high, and it’s reasonable to assume that those who anticipate and meet buyers’ expectations stand the best chance of success. Figure 2: Supplier Performance on Attributes Base: Varied bases among those placing importance on each attribute* How well do your current suppliers meet your needs regarding those factors that are important to you? (Select one for each response)? top -2 box Very Well Extremely Well 57% 58% 55% 55% 65% 56% 61% 53% 57% 57% 58% 58% 65% 64% 61% 29% 30% 34% 34% 25% 34% 31% 39% 35% 35% 35% 36% 30% 32% 37% Shipping costs Contract / negotiated pricing Value-added services, such as repairs, training or technical support Printed / hardcopy product catalog Product price Payment options Product catalog / product information on supplier website Having a nearby physical location where I can purchase or pick up Return policies and procedures Ability to make purchases on the supplier’s website The supplier’s website overall Delivery when products are needed Having a sales representative Product availability Product quality 86% 88% 89% 89% 90% 90% 92% 92% 92% 92% 93% 94% 95% 96% 98% Research methods - most used and most preferred More buyers choose websites and search engines to research industrial supplies purchases, and they’re also the most preferred methods. A majority of buyers are researching supply purchases via supplier websites (68%), and 52% are using search engines. Purchasers who prefer non-web based research – which includes everything from catalogs to independent reviews to technical articles – cite personal interaction and unbiased information as their reasons for choosing offline methods. As might be expected, buyers spending more than $250,000 annually on industrial supplies are much more likely to rely on sales representatives and catalogs for information. However, buyers in higher spending brackets may have greater access to sales representatives. UPS B2B Purchasing Insights Study | April 2014 7 Given buyers’ high satisfaction levels with supplier performance on key selection criteria, and considering that web-based research is most preferred, it’s reasonable to infer that many buyers consider online research essential to their supplier selection process. The use of search engines means that suppliers may be at greater risk of losing share to companies whose products are perhaps easier to find, in stock or more competitively priced. On the other hand, suppliers whose products are easy to find online and meet buyers’ criteria may also stand to gain customers. Figure 3: Industrial Supplies Purchasers’ Research Methods Base: All respondents n=1,501 What is your most preferred method for researching industrial products? (Select one) How do you currently research your industrial supplies purchases? (Select all that apply) ? 68%Suppliers’ website 30% 52%Search engine results that take me directly to the product I need 19% 47%Suppliers’ print/hard copy catalogue 11% 43%Account / Sales Representative 12% 40%User reviews and recommendations 12% 29%Reviews from independent trade publications 7% 28%Technical articles or whitepapers from the product’s manufacturer 5% most preferred research method Purchasing Purchasing online is the most used and most preferred method, but traditional methods endure Sixty-three percent of industrial supplies buyers purchase through websites, whether directly from suppliers or through a third-party provider, but use and preference for phone, fax and placing orders through sales representatives or emails remain strong. Across all purchase methods, the reasons cited were factors related to speed, ease and convenience. Those who prefer offline channels to make purchases cited personal interaction and the ability to get answers to order-related questions. Some participants noted company procurement policies dictated the purchase method they used. Figure 4: Important Criteria When Selecting Suppliers Base: All respondents - n=1,501 Which of the following methods do you use to purchase industrial supplies? (Select all that apply) Which of these are your preferred methods to purchase industrial supplies? (Select up to TWO responses) ? Most preferred purchase methods(s)Purchase methods(s) 6% 30% 38% 50% 26% 41% 54% 33% 46% 59% 20% 57% 63% 2% 12% 17% 27% 12% 21% 32% 13% 19% 32% 6% 37% 40% Electronic data interchange (EDI) Email to a designated account representative Email to customer service (Net) Email In-person during sales visit from account rep. In-person at the supplier’s physical location (Net) In-Person Phone or fax to a designated account representative Phone or fax to customer service (Net) Phone or fax Third-party website (e.g. AmazonSupply or Google Shopping) Directly from the industrial supplier’s website (Net) Website UPS B2B Purchasing Insights Study | April 2014 8 Looking at buyers’ projected purchase behavior in Figure 5, it’s fair to assume that the rate of online purchasing from supplier websites will continue to rise. Figure 5: Approximate Percent of Annual Spend Conducted on Suppliers’ Websites Base: Among supplier website purchasers; n=863 14% 31% 36% 18% Less than 25% 25-50% 50-75% 75% or more 39% 54% 4% 3 % Spend more online About the same Spend less online Don't know Approximately how much of your annual spend on industrial supplies is conducted on suppliers’ websites? (Select one)? How do you foresee the amount you spend on suppliers’ websites changing in the next few years? ? UPS B2B Purchasing Insights Study | April 2014 9 The opportunity to gain or lose online customers is underscored in Figure 7, showing that 34% of buyers say they’ve gone outside their existing supply base to make an online purchase. Buyers spending less than $50,000 per year are more likely to purchase online from a supplier with which they had no previous relationship. Figure 7: Pre-existing Offline Relationship with Supplier(s) for Online Purchases Base: Among supplier website purchasers; n=863 Thinking about the industrial suppliers whose websites you currently purchase from, did you have an offline relationship with them before making your first online purchase with them? (Select one)? 5% 6% 5% 4% 34% 44% BC 27% 22% 61% 50% 68% A 73% A Yes No I don't know (n=863) (n=381) (n=303) (n=179) Letters indicate statistical significance at 95% confidence level Annual Spend on industrial supplies Total <$50k $50k - $250K $250k+A B C Most purchases are a combination of repeat and one-off orders The majority of buyers across all spending levels report making a combination of repeat and one-off purchases, indicating that suppliers may have ample opportunity to acquire new customers. Since buyers expect to increase their online purchases in the future, and a clear majority prefer to research supplies online, having robust e-commerce and Search Engine Optimization (SEO) and Search Engine Marketing (SEM) strategies are essential for suppliers seeking to add or potentially retain customers. Figure 6: Repeat Versus One-off Purchases Base: All respondents; n=1,501 Which of the following best describes your company’s purchases of industrial supplies? (Select one response)? 35% 37 % 34% 32% 60% 58 % 62% 62% 5% 5% 4 % 6% All or almost all of our puchases are one-off purchases We have a mix of repeat purchases and one-off purchases All or almost all of our purchases are repeat purchases (n=1,501) (n=680) (n=504) (n=317) (n=1,501) (n=680) (n=504) (n=317) Annual Spend on industrial supplies Total <$50k $50k - $250K $250k+A B C UPS B2B Purchasing Insights Study | April 2014 10 Supplier websites Online ordering has become table stakes; most buyers say half or more of their vendors offer website ordering For 67% of buyers, the ability to order through a supplier’s website is considered either very important (38%) or extremely important (29%). Buyers with larger budgets, and younger purchasers, assign the highest importance to online ordering. Buyers indicate that the majority of their suppliers offer website ordering. Again, it can be questioned whether the majority of suppliers actually offer website ordering or whether buyers have established more relationships with vendors who meet their expectations for that capability. Regardless of the explanation, the importance buyers assign to online ordering is high and worthy of supplier attention. Despite the growth in current and projected online sales, many industrial supplies purchasers still rely on traditional methods when researching and ordering products. It could be argued that the complexity of B2B purchasing, such as negotiated pricing and procurement policies, means that online buying is unlikely to completely replace all offline methods in the immediate future. Figure 8: Importance of Ordering from Supplier’s Website Base: All respondents - n=1,501 29% 38% 26% 7% Extremely important Very Important Somewhat Important Not at All Important 30% 39% 16% 11% 1% 4 % All Most About half Some None I don't know How important is it that a supplier offer the ability to order products directly from its website? ? How many of your current suppliers offer the ability to order products directly from their website? (Select one)? UPS B2B Purchasing Insights Study | April 2014 11 Supplier website features and functions are apparently on the right track As seen earlier in the report, buyers on the whole are satisfied with their suppliers’ websites. In fact, 93% of purchasers report the websites they order from are the same or better than the consumer websites they use to make personal online purchases. The higher the annual spend, the more favorably B2B websites are viewed compared to consumer websites. Figure 9: Suppliers’ Websites vs. Consumer Websites Base: Among supplier website purchasers; n=863 How do the industrial suppliers’ websites you use to make online purchases compare to the websites you use to make personal online purchases? (Select one)? 7% 9% 1% 5% 5% 56% 68% BC 50% C 40% 22% 18% 24% 26% A 15% 4% 20% A 29% AB Much better Somewhat better Same Somewhat worse Much worse (n=863) (n=381) (n=303) (n=179) Letters indicate statistical significance at 95% confidence level Annual Spend on industrial supplies Total <$50k $50k - $250K $250k+A B C Online buyers appreciate website features that offer more insight into order cost and status Among buyers who purchase through suppliers’ websites, the ability to know shipping costs before ordering is one of the most mentioned benefits. Other frequently named benefits are real-time product availability, purchase history and delivery dates Figure 10: Benefits of Ordering from Suppliers’ Websites Base: Among supplier website purchasers; n=863 What are the benefits of ordering from industrial suppliers’ websites? (Select all that apply)? 64% 63% 63% 63% 59% 59% 58% 58% 54% 33% 2% Ability to know shipping costs before ordering Ability to see real-time product availability Ability to view purchase history Ability to see estimated delivery date when ordering More convenient than phone or fax Ability to see very detailed product information Ability to easily make repeat orders Ability to see the most up-to-date product information Faster order processing Ability to see my negotiated pricing Other UPS B2B Purchasing Insights Study | April 2014 12 Industrial supplies buyers do have a website wish list Earlier, we saw that industrial supplies buyers are very satisfied with their vendors’ performance. Buyers do see areas for improvement in the online buying experience, though. Specifically, having better visibility into real-time product availability is the feature buyers most want improved, and by a sizeable margin. Suppliers who fully integrate their e-commerce and inventory management platforms may have a competitive advantage here. Figure 11: How Suppliers’ Websites Could Improve Base: Among supplier website purchasers; n=863 In what ways could the suppliers’ websites you use improve? (Select all that apply)? 53% 37% 37% 35% 34% 29% 27% 27% 26% 20% 5% Show real-time product availability Make it easier to find the products I’m looking for Show shipping costs before making a purchase Improve site navigation Show estimated delivery date when purchasing Make it easy to make repeat orders Offer online chat with customer service Show my negotiated pricing on the website Show detailed order history of past orders More up-to-date product information Other Those who buy through suppliers’ websites see some downsides, such as less personal service (57%), and more difficult to get answers to product or order-related questions (40%). It’s possible that buyers who have access to knowledgeable customer service representatives via online chat may possibly rely less on more traditional methods of purchase Figure 12: Drawbacks of Ordering from Suppliers’ Websites Base: Among supplier website purchasers; n=863 What are the drawbacks of ordering from industrial suppliers’ websites? (Select all that apply)? 57% 40% 24% 21% 18% 14% 14% 10% 10% 6% Less personal service More difficult to get answers to product or order-related questions My suppliers’ sites don’t show my negotiated pricing Not all payment options are available My suppliers’ sites aren’t updated regularly with latest product information My suppliers’ sites are difficult to navigate Harder to find the product(s) I need Placing repeat orders is difficult My suppliers’ sites don’t show the delivery date Other UPS B2B Purchasing Insights Study | April 2014 13 Barriers to online purchasing Despite buyers’ satisfaction with suppliers’ websites, those who don’t buy online cite several reasons; top among them are those who simply prefer to buy through offline channels. Other reasons cited are related to the need for answers to product questions or pricing. In fact, since multiple reasons could be selected, some of the reasons are likely interrelated. While some buyers may remain more resistant to online buying than others, it’s reasonable to assume that satisfying the need for more detailed product and pricing information through online channels may help to migrate existing customers to online channels, or to help gain new online customers. Figure 13: Barriers Preventing Non-web Purchasers from Transacting on Suppliers’ Websites Base: Among non-web purchasers whose suppliers offer web purchases; n=626 Which of the following prevent you from purchasing industrial supplies from suppliers’ websites? (Select all that apply) ? 30% 29% 27% 26% 24% 22% 18% 17% 12% 10% 9% 3% Nothing prevents me, just prefer current method Need advice / information from knowledgeable sales person Product information is not detailed enough Pricing information is not detailed enough Difficult to find the products I need Shipping information is not detailed enough My contract / negotiated pricing is not available online Returns information is not detailed enough Suppliers don’t offer website ordering I can’t bill an online order to my account with the supplier Can’t use my preferred payment method Other UPS B2B Purchasing Insights Study | April 2014 14 Shipping, Delivery and Returns Earlier, Figure 3 showed that the overwhelming majority of buyers indicate their suppliers are performing well on criteria related to shipping, delivery and returns. Digging deeper, Figure 14 below illustrates that a majority of all surveyed buyers see shipping and delivery factors as very important or extremely important in the purchase process. Buyers want to see accurate shipping costs (87%) and estimated delivery dates (85%) before they buy, and 85% indicate that it’s important to have discounted shipping for large orders as well as tracking information. These results underscore that buyers are looking for an integrated and seamless purchasing experience. Suppliers, in order to meet their customers’ needs and remain competitive, should make sure their online and offline purchasing systems are highly integrated with order management, inventory, e-commerce, billing and returns processes. Figure 14: Shipping and Delivery Experience Base: All respondents; n=1,501 How important are the following aspects regarding the shipping and delivery of industrial supplies? (Select one for each)? How important are the following when deciding which industrial supplies vendors to purchase from? ? top -2 box Very Important Extremely Important 61% 67% 68% 75% 85% 85% 85% 87% Detailed, accurate shipping costs prior to payment Estimated delivery date prior to payment Discounted / free shipping for larger orders Tracking information after payment The ability to choose different shipping options to meet my desired delivery date The ability to pay with my preferred shipping carrier account Batch shipping – all the products in my order arrive at the same time The ability to use my preferred shipping carrier 37% 50% 37% 48% 35% 50% 35% 50% 36% 39% 33% 35% 34% 33% 32% 29% Figure 1: Barriers Preventing Non-web Purchasers from Transacting on Suppliers’ Websites Base: Among non-web purchasers whose suppliers offer web purchases; n=626 top -2 box Very Important Extremely Important 31% 32% 32% 34% 33% 35% 39% 35% 35% 34% 37% 38% 34% 28% 31% 27% 25% 23% 24% 26% 25% 36% 34% 31% 36% 39% 41% 41% 42% 50% 63% 61% 66% 70% Printed / hardcopy product catalog Online reviews of the supplier Having a sales representative Word-of-mouth recommendations from coworkers or peers Having a nearby physical location where I can purchase or pick up Payment options The supplier’s website overall Value-added services, such as repairs, training or technical support Ability to make purchases on the supplier’s website Contract / negotiated pricing Product catalog / product information on supplier website Return policies and procedures Shipping costs Delivery when products are needed Product price Product availability Product quality 54% 56% 58% 59% 69% 69% 70% 71% 74% 75% 78% 80% 84% 91% 92% 93% 95% Returns policies are important to buyers At the opening of this white paper, Figure 1 showed that return policies and procedures are high among criteria considered important when selecting a supplier. UPS B2B Purchasing Insights Study | April 2014 15 How often do you return industrial supplies that you purchase? (Select one)? 5% A 15% AB 1% 12% A 14% A 13% 21% A 24% A 68% BC 55% C 44 % 17% BC 7% C 3% (n=680) (n=504) (n=317) Never Rarely Occasionally Frequently Very frequently Letters indicate statistical significance at 95% confidence level A B C Annual Spend on industrial supplies <$50k $50k - $250K $250k+A B C Figure 15: Frequency of Returns Base: All respondents n=1,501 Which of the following would improve industrial suppliers’ returns processes? (Select all that apply)? 53% 40% 37% 37% 34% 25% 16% 2% Pre-printed return shipping labels included with the original delivery The ability to handle all aspects of the return online using the industrial supplier’s website The ability to speak directly with a customer service representative regarding my return Faster delivery of replacement industrial products More flexible timeframes for making returns Ability to return products to a physical location The ability to make batch returns Other Among those who make returns, pre-printed shipping labels top the wish list There are a variety of opportunities to make the returns process more streamlined and convenient, with the key needs being ease, speed, and flexibility. Most buyers who make returns (53%) think the returns process could be improved by including a pre-printed return shipping label with the original delivery. Forty-percent think the ability to handle all aspects of a return online would help. Annual spending levels do show differences in responses, however. Buyers with $250,000+ annual spend are more likely to choose handling all aspects of returns online while those spending less than $50,000 annually more often cite the ability to return products to a physical location. Figure 16: Improving Returns Process Base: All respondents who make returns n=1,339 As shown in Figure 15, over half of buyers in the $250,000+ spending category indicate they make returns; 29% say they return industrial supplies frequently (14%) or very frequently (15%). UPS B2B Purchasing Insights Study | April 2014 16 Post-sales service and support could be a differentiator When buyers were asked whether having better access to post-sales service and support information online, such as product manuals and warranty information, would affect their willingness to purchase from a new vendor, 68% indicated that it would make them somewhat likely (50%) or much more likely (18%) to purchase from a new vendor. The influence of post-sales information appears strongest for buyers at higher annual spending levels, particularly at $250,000 or more per year, for which 82% are either somewhat more likely (50%) or much more likely (32%). The obvious implication is that for suppliers looking to gain new customers and retain existing customers, offering an enhanced level of post-sales information and support on their websites may be a competitive advantage. These findings also suggests that suppliers should not view their websites as merely online catalogs and transaction vehicles, but platforms to engage purchasers across the entire customer lifecycle. Figure 17: Post-sale Service/Support on Website’s Influence on Selecting New Supplier Base: All respondents n=1,501 How much influence would these types of post-sale information and materials on a supplier’s website have on your willingness to do business with a new supplier? (Select one)? (n=680) (n=504) (n=317) 18% 9% 19% A 32% AB 50% 45% 57% AC 50% 32% 46% BC 24% 18 % No influence. I would be no more likely to do business with a new supplier because of this Somewhat more likely Much more likely Letters indicate statistical significance at 95% confidence level (n=1,501) Annual Spend on industrial supplies Total <$50k $50k - $250K $250k+A B C UPS B2B Purchasing Insights Study | April 2014 17 Conclusions and Implications Online selling is changing the dynamics of buyer-vendor relationships. While more traditional selling channels like catalogs, phone/fax or sales representatives are still in demand, buyers use and prefer online channels more. Thirty-four percent of buyers surveyed say they’ve gone outside of their supply base to make an online purchase. Their responses imply that if they can’t find the product, price and delivery date they need, another vendor is just a click away. More than ever, suppliers need to be in the right place at the right time online, but that’s not all. Buyers want features that make them more confident in their orders before clicking submit, such as real-time product availability and firm or guaranteed shipping dates. They also want to know the returns policy and see their negotiated pricing. One of the greatest challenges suppliers face in meeting those needs is making sure their e-commerce systems are integrated with front- and back-office systems to create a seamless customer experience across multiple channels. In the end, suppliers who deliver the buying channels their customers want, while continuing to advance and improve their customers’ online buying experience, would seem to have the greatest competitive advantage. Potential actions for suppliers • Embrace e-commerce (but not exclusively): Suppliers who are not yet online risk being excluded from consideration by buyers at all spending levels. While traditional selling methods should not be abandoned yet, to not be present where a majority of buyers are increasingly spending their budgets will make it difficult, if not impossible, to compete. • Continually improve the customer experience: The factors that buyers rate most important when researching and buying require a high level of integration between inventory, pricing, shipping and returns processes. Providing a seamless and complete purchase experience gives buyers the confidence they need to place an order, and can reduce inquiries and potential write-offs. • Be in the right place when buyers are looking: Having a superior supplier website with stellar functionality means little if buyers can’t find the site or don’t know it’s available. Making sure products and supplier information can be found easily by search engines (Search Engine Optimization – SEO), and being visible when buyers search for products (Search Engine Marketing – SEM), are essential strategies for retaining and increasing a customer base. ©2014 United Parcel Service of America, Inc. UPS, the UPS brandmark and the color brown are registered trademarks of United Parcel Service of America, Inc. All rights reserved.