19:29 | 07/11/2019 Information Technology
According to research from UPS into B2B commerce in Asia, almost 30% of industrial purchases are now made on e-commerce platforms. With digital platforms being an inseparable part of our daily lives, including business purchasing, is there still a role for human interaction in the buying process?
Industrial buyers are increasingly adopting online platforms for procurement, either buying directly from manufacturers or online marketplaces. “Understanding your customer” is one of the fundamental tenets of good business, and fortunately for business to consumer (B2C) companies, there is a wealth of information out there in the form of consumer reports and studies that delve into the minds of shoppers. But what about business to business (B2B) sellers? The B2B buying process is markedly different from B2C, involving multiple layers and decision makers. Research dedicated to understanding industrial buying behaviour should likewise account for these complexities.
It is partly because of this that we commissioned the UPS Industrial Buying Dynamic Study, which surveyed nearly 3,000 industrial purchasers globally, including 600 from Asia Pacific’s big three: China, Japan and Thailand. In fact, these three markets have historically been amongst the top 10 export partners of Vietnam and, are important destinations for export of industrial products. Here are the three things Vietnamese businesses need to know from UPS’s research.
The report found that Asia’s B2B buyers are different, in many ways, from their counterparts in Europe and America, in their response to megatrends like technology adoption and globalisation. The big takeaway, however, was this: there is a fundamental emphasis in Asia on the continued reliance on human interactions in a world where e-commerce is increasing, automation is more integrated in industrial processes, and AI is shaking up the workforce. In order for Vietnamese businesses to attract and retain customers from key Asian economies, understanding this balance between technological progress in this era of growing digitalisation and the more traditional elements of customer service is vital.
Online purchasing goes hand in hand with expectations of personal relationships and interactions
It is tempting to view the rise of e-commerce as a sign that person-to-person interactions are no longer preferred when it comes to trade. After all, initial findings from our study indicate that online purchase methods like marketplaces and direct-from-manufacturer sales have stolen as much as an eight percent market share, in the case of Japan, from traditional vendors like distributors. Don’t go reaching for that mouse too fast - while respondents in Asia indicated that they intend to make more industrial purchases online in the next five years, they were also more likely to emphasise the importance of interpersonal relationships than their counterparts in the US and Europe—in particular, establishing a supplier-buyer connection prior to making a purchase online. Asian buyers are also more likely to want to speak over the phone with their suppliers than their counterparts in other regions.
The upshot of this is that suppliers, while building their online presence, also need to ensure that the “human side” of their business is not diminished. For instance, in China, 22 percent of the survey respondents said they would be likely to shift to a different supplier with a website that delivers a consistent experience on a smartphone, tablet, and desktop. Taking this well-integrated approach to e-commerce can be key for Vietnamese enterprises to win over customers, especially with Chinese partners as mentioned. At the same time, however, having a well-resourced sales team is vital, and where possible, they should be plugged into the e-commerce process, such as having live chat options at various touchpoints during online sales and encouraging follow-up calls with online buyers.
Human interaction is still valued
Industrial buyers in Asia place greater emphasis on post-sales support more so than those in other regions. This includes 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. Particularly noteworthy is the importance placed on on-site maintenance and repair in the region, especially from Chinese and Japanese buyers, something which is likely the result of Asia’s position as a manufacturing powerhouse. For example, if a piece of machinery you use on your production line breaks down, the ability to have it back up and running quickly can mean the difference between a minor blip if quickly remedied by post-sales servicing, versus a major disruption to revenue and worse still, irreparable damage to customer relationships when replacement parts need to be ordered online and shipped. This again highlights the importance that Asian buyers place in ensuring human input at all points along the sales process; the process does not simply end once the product has been delivered to the buyer.
Most sourcing is still domestic
While buyers in most markets are open to sourcing from international sellers (except for Japan, where 90 percent of B2B purchases are made domestically), the majority of purchasing still occurs within borders. There are clear reasons for this, and these offer a roadmap for businesses in Southeast Asia , and Vietnam in particular, who want to make more international sales. Our study found that buyers have various anxieties about purchasing from suppliers overseas, including longer transit times, customs delays, issues with returns, lack of shipment visibility, variety in quality, and issues with payment methods. Shipping factors make up the bulk of the concerns about international purchasing—and yet these are all issues which can be easily solved by an experienced logistics partner than can offer reduced transit times (often with regional delivery times that are just as quick as domestic delivery), real-time tracking and visibility services, and streamlined customs processes. It is no silver bullet to attracting international clients, but making these changes to your approach to shipping can increase the likelihood that a buyer will seriously consider your company’s offerings.
The human side of B2B
Reports of the death of human interactions as a result of technological revolutions may have been greatly exaggerated; even in a field as complex as industrial supply, this just simply isn’t the case. In fact, it may well be because B2B transactions are complicated that buyers seek the nuanced communications and reassurances that can really only come from working with another human being. The takeaway for industrial players is this: solutions should aim to balance the convenience and innovation of advanced technologies with human touchpoints. Software, no matter how smart, is hard pressed to replace the impact and rapport of interpersonal relations. So while business owners continue to adopt technology that improve the purchase process and overall customer journey, bear in mind the oft overlooked impact of the human touch. Making relatively minor adjustments along these three areas above might be the key to attracting customers, and retaining them for the long haul—no matter where technology takes us in the next few years.
Russell Reed - Managing Director of UPS Vietnam & Thailand