- In-person relationships remain important for Thai manufacturers wishing to expand business globally, despite growing popularity of purchasing via e-marketplaces and mobile applications
- Thai manufacturers must provide post-sales services to differentiate themselves from the competition and capture U.S., Chinese and European markets
Insights from a 2017 UPS (NYSE: UPS) Industrial Buying Dynamics (IBD) survey suggests Thai manufacturers can take action in five key areas in order to appeal to industrial buyers across the United States (U.S.), China, and Europe.
These include e-commerce, personal touchpoints, post-sales, quality and reputation, and 3D printing. By understanding the behaviors and perceptions of industrial buyers in these three key markets, manufacturers in Thailand can better plan and prioritize international expansion plans.
Results from the survey indicate China is outpacing both the U.S. and Europe in the adoption of online and mobile channels for making purchases. This finding supports early signs that purchasing on e-marketplaces and mobile applications is likely to grow, despite the continued importance of in-person relationships. Post-sales service is also a must-have offering for buyers across all markets, with returns being the most highly valued service amongst buyers in the U.S. and Europe.
Tan Boon Tiam, Managing Director of UPS Thailand, said, "Thai manufacturers are in heart of the automotive and logistics hub of Southeast Asia, and must continue to maintain quality and add value in line with the government's Thailand 4.0 initiatives in order to achieve long-term success. With China and the U.S. as Thailand's top two export markets, and Thailand being the European Union's third-largest trading partner in ASEAN, local manufacturers are well-suited to take advantage of insights from this study to gain a competitive advantage in their quest to go global."
According to the survey, manufacturers in Thailand can focus on the following areas to grow their business internationally and better satisfy customer needs in the U.S., China, and Europe:
- Online purchasing via e-marketplaces and mobile applications are all expected to increase in the near future. According to the survey, 43% of industrial buyers in China already use mobile applications to make a purchase, outpacing the U.S. (30%) and Europe (17%). With the rapid sophistication of Asia's e-commerce landscape, and digital channels transforming the path to purchase for consumers across Asia Pacific, manufacturers are well-poised to continue leveraging these strengths to expand to China where adoption rates are already high, as well as the U.S. and Europe where traditional suppliers lag in digital capabilities.
- Though online purchasing is becoming more popular, in-person relationships are still important for Thai manufacturers expanding their businesses overseas. In China and the U.S., the top two purchasing channels are the supplier's website (China 17%, U.S. 23%) and in-person with a sales representative (China 25%, U.S. 22%). This trend is similar with European buyers, who tend to purchase via e-mail (24%) and in-person (22%). Of note is 93% of Chinese buyers said they require that an offline relationship be established before making a purchase, suggesting that Thai manufacturers looking to penetrate the China market should strive to cultivate the right connections and personal inroads in order to be successful. Additionally, buyers across all markets primarily choose to purchase in-person because it is perceived to be the easiest way to get answers to product-related questions. This presents Thai manufacturers an opportunity to improve salesforce productivity by providing answers to product-related questions online.
- Post-sales presents an opportunity for Thai manufacturers to differentiate themselves from the competition. Post-sales service is important and expected across all markets, especially in China (99%), the U.S. (76%), and Europe (86%). Post-sales has become such an important offering that one-fifth to a third of buyers overall say they are extremely likely to switch to suppliers offering post-sales support. At least a third of all buyers in China (32%), the U.S. (43%), and Europe (34%) expect return policies. Also featuring prominently is the need for on-site maintenance and repairs, which Chinese (82%), U.S. (61%), and European (61%) buyers deem necessary. Ensuring easy returns and post-sales on-site services will go far in enabling Thai manufacturers to stand out from the competition and grow their international market share.
- When selecting a supplier, the most critical factor for buyers across China, the U.S., and Europe is product quality. Beyond this, factors such as price and value, and product availability rank highly. The survey shows majority of Chinese (55%), U.S. (72%) and European (67%) industrial buyers are primarily sourcing domestically. Conversely, this means 45% of Chinese buyers are buying from overseas, indicating significant room for Thai suppliers to grow their business in China. The top three reasons Chinese buyers purchase domestically are cost (64%), quality (46%), and ease of doing business (45%). Thai manufacturers wishing to penetrate these markets need to intensify their communications efforts to resonate with the unique needs of each market.
- Value-added services, such as 3D printing, are a way for Thai manufacturers to stand out from the competition. The survey results revealed early signs of buyers' willingness to switch to suppliers offering 3D printing services, with 20% of Chinese, 18% of U.S. and 12% of European buyers saying they are extremely likely to do so. 3D printing as a service is perceived to add a level of attractiveness in the form of high quality, customization, and ability to satisfy emergency fulfilments. Thai manufacturers with the resources to invest in 3D printing as a service can leverage this emerging trend to differentiate themselves in an increasingly crowded marketplace.
The UPS Industrial Buying Dynamics study was conducted in December 2016 with 2,500 industrial supply purchasers in China, Europe (United Kingdom, France, Italy, and Germany) and the United States, including decision makers or strong influencers. The study offers manufacturers a glimpse into their position in the marketplace and highlights potential areas for improvement and business growth. This is the third UPS-initiated study of industrial buyers since 2013.