The Distribution Channel: Times Are A-Changing
Technology and other factors have transformed the underlying dynamics of procurement to the extent that distributor relationships are changing radically.
According to a UPS and analyst firm TNS survey of over 1,500 procurement professionals, changing customer expectations, direct-from-manufacturer selling, e-commerce, and the emergence of millennials among buyers are having profound effects on the distribution model.”It is clear that most buyers are taking advantage of the options before them, and are reevaluating the value of being loyal to an established supply base,” UPS said in the report. “Distributors are at the center of unprecedented market pressures. Their customers, both manufacturers and industrial products buyers, have access to more ways to research vendors and products, and to buy and sell than ever before.”As the dust settles in this new distributor model, supplier loyalties are also changing. For example, 38% of online industrial product buyers sourced products from a new supplier vs. 34% in 2013.Also, 72% of those surveyed said they would shift spending to a distributor with a more a user-friendly website, according to the study. In the 2015 study, 66% of industrial buyers surveyed said they mainly made industrial purchase online compared to 57% of those surveyed in 2013, according to UPS.