UPS: Millennial procurement professionals more likely to buy direct from manufacturer

Dive Brief:

Millennial procurement professionals are more likely than older generations to handle industrial purchases through the manufacturer, with 38% of millennials doing so in the UPS Industrial Buying Dynamics survey released this week. This is compared to 33% of Gen Xers and 29% of Boomers.
"This buying preference comes mostly at the expense of distributors, who continue to lose purchase share to manufacturers and online marketplaces," Brooke Yamini, the vice president of global insights at UPS, said in the report.
When researching new suppliers, millennials, Gen Xers and Boomers all use company websites and search engines as their first or second sources. But while older generations go to company sales representatives for their third source, millennials will turn to social media, the survey found.

Dive Insight:

UPS suggests younger generations are more comfortable with buying from the manufacturer because they are familiar with "researching companies online and finding deals using tech channels that may be less familiar to older buyers."

Matt Leonard / Supply Chain Dive, data from UPS

This can be seen in details of where the different generations do their buying. While 33% of Boomers do their purchasing on a company website, that number is only 18% for Millennials who spread out their purchasing over a variety of channels including mobile apps, email and electronic data exchange.

The survey expects this change to continue with direct-from-manufacturer and online purchase volume "likely to increase in the next 3-5 years."

Distributors have lost purchase share falling from 45% in 2017 to 38% in 2019, while online marketplaces and manufacturers have shown growth. These distributors can have advantages over other procurement methods in terms of customer service, a knowledgeable sales representative and quick delivery, the report said. But distributors will need to figure out a way to "increase relevancy and secure mindshare among Millennial buyers by focusing on sustainability, postsales support, ease of ordering, and shipping flexibility."

Purchasing directly from a manufacturer tends to be cheaper in many situations and it allows for more control over the buying process, according to Thomas, a company that works with industrial suppliers.

There are also differences in what the generations look for in their suppliers. Older generations are more focused on price while Millennials are more likely to think about post-purchase support.