Industrial distributors are scrambling to fight off a challenge from asset-light e-marketplaces by adopting sharper mobile offerings and upgrading their customer service, a new study shows.
Vendors of corporate supplies and equipment have traditionally reached their business-to-business (B2B) clients through an inventory-heavy model, but that model is failing to connect with a new generation of millennials who prefer to bypass distributors and order parts directly from manufacturers and e-marketplaces, according to a white paper from UPS Inc. titled "UPS Industrial Buying Dynamics Study: Buyers Raise the Bar for Suppliers."
The change comes as millennials—defined in this study as those aged 21 to 34 years old—enter the workplace with tech-savvy expectations of bypassing the middleman and working with the manufacturer.
That demographic shift is revealed in survey results showing that 81 percent of buyers have purchased directly from manufacturers, up from 64 percent in 2015, the last time UPS compiled this report. Likewise, 80 percent of buyers are likely to shift to suppliers with a more user-friendly web presence, up from 72 percent two years ago. And 75 percent of buyers surveyed have shopped at an e-marketplace, soaring from just 20 percent in the 2013 report, the first year of the study.
"With e-commerce, industrial buyers can choose from numerous suppliers with the click of a button, leaving the traditional business-to-business distributor model threatened," Matthew Guffey, vice president of UPS segment marketing, said in a release. "Maintaining the status quo, even just for now, is not an effective solution. Distributors have to up their game."
The white paper identified four main ways for distributors to stay competitive. In order to reach these young corporate buyers where and how they want to interact, industrial distributors must
One of the e-marketplaces exerting pressure on traditional industrial distribution channels is none other than the online retailing colossus Amazon.com Inc., which launched a B2B wholesale site called AmazonSupply way back in 2012. Now known as Amazon Business, the pOréal offers a catalog of products and services tailored to business buyers, such as bulk discounts, multi-user accounts, purchasing analytics, and tax-exempt buying for qualifying organizations.