B2B buyers in the Asian region are doing much of their purchasing online, but offline remains vital, according to a UPS study released today.
UPS’ 2019 UPS Industrial Buying Dynamics Asia Pacific Study, found that while online purchasing was growing, buyers in the region still rely heavily on offline relationships and seeking out solid after-sales service.
The study, which surveyed more than 3,400 industrial purchasers globally, including 600 from companies across China, Japan, and Thailand, offers region-level insights and specific market-level traits that can help B2B businesses better connect with buyers in Asia, UPS says.
“What we see in Asia is that business relationships are not one dimensional – online channels are popular, but so too are more traditional forms of buying, and this presents a real balancing act for those who want to sell in this region,” said Sylvie Van Den Kerkhof, vice president of Marketing, UPS Asia Pacific Region.
“The data suggests that businesses wanting to work in Asian markets need to ensure that their e-commerce and bricks-and-mortar operations are both optimised and integrated, while ensuring that post-sales services, such as returns, offer a seamless experience for buyers.”
Where in other regions, shifting demographics have a much bigger role to play in purchasing behaviour, to be successful here in Asia, a recommended approach is to consider buyers by job responsibility, rather than nationality or age demographic. As the study shows, Asia is a region of tremendous complexity – one where all buyers are focused on the targeted demands of service for their organisations.
Shifting procurement models
The report found strong indications that online buying is set to increase, with Asian buyers saying they plan to use this channel more within the next five years. Among those that prefer making purchases online, Japanese buyers purchase online at a higher rate (31 per cent) than buyers in both China and Thailand (both at 14 per cent).
Meanwhile, in Thailand, companies with higher budgets report that in the next three to five years, they are more likely to move purchasing online; and in China, mobile online purchasing is seeing stronger growth than in other Asian nations.
Notwithstanding the anticipated increase in online purchases among Asian buyers, the report also indicates that speaking over the phone, or in person happens more frequently in Asia than in the US or Europe.
Asian buyers especially value establishing a relationship in person before purchasing online – this practice is most pronounced in China, where winning trust before doing business is a key part of the deal-making process.
Sourcing goes global
As a region, Asia is similar to the rest of the world in terms of how much its buyers source from domestic suppliers — 67 per cent of all B2B purchases in Asia come from domestic suppliers, versus 73 per cent in the US and 64 per cent in Europe. However, there is one outlier in the region: Japan, where buyers source 90 per cent of all goods domestically.
This may change in the near future, however, with the country having recently signed a series of free trade deals – most notably with the European Union. When asked what they considered to be the barriers to making international purchases, the top three factors listed by respondents in Asia were longer transit times (60 per cent), customs delays (55 per cent), and issues with returns (45 per cent).
Post-sales services are a priority
Globally, post-sales support continues to emerge as an important component of industrial buying, consistent across different categories of buyers and industry segments. However, the research found Asian buyers, in particular, value all post-sales services more than buyers do in other regions.
These include services such as general returns, pick-up services for difficult-to-ship products, and the provision of ready-made packaging and shipping materials for returns. In China and Japan, the post-sales service that matters most is on-site maintenance and repairs, and in Thailand, returns rank most highly.
“At UPS, we’ve seen first-hand the important role that post-sales services play in both establishing and strengthening business relationships,” says Sahil Jaggi, director of Product and Customer Segment Marketing, UPS Asia Pacific Region.
“While we often think of returns as being a consumer need, their role in B2B relationships is just as, if not more important. A simple and cost-effective returns process means that manufacturers can replace incorrectly sold components back into inventory for re-sale, or a retailer can free up warehouse space for new products by sending back excessive or old stock—both of which can make substantial differences in operating costs for businesses.”
The 2019 UPS Industrial Buying Dynamics Study was conducted by Burke, Inc. on behalf of UPS, is based on a survey of more than 3,400 respondents globally – including 600 in Asia – who purchase industrial parts, products, or supplies for use in 15 industries.