Research: Essendant

Understanding market forces is fundamental to a successful business, and Essendant's latest research seeks to make sense of our rapidly-changing industry and its impact on the workplace.

US wholesaler Essendant revealed new end-user research during its CORE Live event held recently in Las Vegas. The survey of 1,500 B2B buyers, including over 500 millennials, builds a picture of traditional OP and professional facility buyers purchasing from a host of resellers including Staples, Office Depot, Amazon, WB Mason and many independent dealers.

Delving deep into the psyche of B2B purchasers, the survey revealed that almost three quarters (73%) of millennials are involved in B2B decision-making with one third the final/sole decision maker for their department. To put this into further context, millennials now make up the largest segment of the US workforce at 53 million and by 2020 will account for 46% of the labour force.

Equally important for future-proofing the industry, the research revealed the top six attributes that millennials look for in a website:

  1. Save frequently ordered items
  2. See available inventory
  3. Live chat/customer support
  4. Ratings and reviews
  5. Online returns and processing
  6. Video buying guides etc

The research revealed little difference between OP and jan/san buyers in terms of what they consider to be important for online purchasing. The top criteria for both groups is accurate pricing along with clearly indicated delivery costs. For the OP buyer, however, the ability to order products online is vital (52%) whereas almost half (48%) of all jan/san buyers cited available safety data sheets and material safety data sheets for each item as crucial.

Mobile mania

Smartphone ownership for millennials is considerably higher (86%) than for baby boomers (58%). In the workplace, 82% of millennials use a mobile device to collect information about office products. In fact, just under half (49%) of all buyers use a mobile device for product research while at work to compare prices and features, read product literature, and 42% use it to make purchases.

So where do buyers go for business supplies information and to compare prices online? Research indicates that Staples.com is the top choice, followed by Amazon.com, Officedepot.com and then Google. The majority of time online (70%) is spent looking for product information and two thirds of buyers also check prices while browsing. Encouragingly, 67% of B2B buyers overall do place orders for workplace products online, with a slightly higher proportion of millennials (75%) reporting the same.

So with two thirds of office products now being ordered online, the race is on to up the ante on website functionality as buyers are increasingly looking for value-adds such as ratings and reviews (68%), purchase history (68%), live chat (65%) and buying guides/educational tools (63%).

A notable survey response is the dramatic drop in the use of catalogues within the decision-making process. According to the research, 71% of B2B buyers used a catalogue in 2011, but in 2016 this had fallen to just 11%.

Survey respondents stated that having competitive pricing is still the number one criterion for an office products supplier. But a lot has changed in the past two years: having an e-commerce site has jumped from sixth place to second, while good customer service is in third position when this option simply didn’t exist in 2014.

The Amazon effect

It is likely that the desire for good customer service has been highly influenced by buyers using consumer websites with the result that similar e-commerce experiences are expected to be the norm when purchasing business supplies. Amazon has set the bar high here of course, and as Essendant President of Office and Facilities Harry Dochelli pointed out during CORE Live, the e-tailer is now “more than a competitor. It is a habit”.

B2B customers are clearly using Amazon to make work-related purchases – Amazon Business alone raked in $1 billion in sales in 2016 – but what are they actually buying from the website? According to Essendant, it’s items in the following categories: office products (47%), tech/computer items (45%), printer ink/toner (30%), copy/printer paper (17%), office furniture (16%); breakroom, coffee and jan/san (14%).

Buyers check Amazon 70% of the time when looking to make a purchase, with 65% having used it to buy business supplies. Reasons for doing so include: competitive prices, easy-to-locate items, one-stop shop, on-time deliveries and easy reordering. In terms of Amazon’s advantage over other websites, the most common answers were: good product availability, customer ratings and reviews, rapid delivery service, deep product range and the best pricing.

Customer loyalty

But it’s not all doom and gloom. The independent dealer channel (IDC) offers some significant advantages over a company like Amazon. B2B buyers said it is difficult to speak to anyone at the e-commerce giant, they are not product experts and simply do not possess office supplies knowledge.

Customers are still switching allegiance, however. The question is why, and what can be done about it? The main reasons cited for changing a workplace supplier were finding better deals elsewhere, out-of- stock products, convenience, and better overall service. Several added-value services would keep B2B buyers from switching, and they would also be willing to pay for them. These include premium/faster delivery service, ongoing maintenance, purchasing analysis reports and product recycling.

The IDC certainly has the advantage in convenience and excellent overall service, and the good news is that it also has the most loyal customers – over half (54%) would continue to stay loyal to their dealer even if better pricing was found elsewhere.

However, it’s worth noting that one in three businesses are not even aware of a local independent dealer. Of those that are acquainted with a local reseller, 41% have not purchased anything from them.

Clearly, there are still misconceptions about the IDC out there that need to be addressed, including perceptions surrounding high prices, difficult purchasing processes, poor website experiences, and being unable to compete with the national chains on service and product selection.

On a related note, OPI and Martin Wilde Associates will this summer publish Piranha Business, a new market research report that examines the experiences of B2B buyers with Amazon Business.

 

Recommendations for the independent dealer

  • Differentiate: communicate value proposition, be local, give back
  • New customers: be open to new customer segments
  • Digital and marketing: leverage tools to be on par with the competition
  • Transform sales: re-evaluate sales organisation, scoop up talent
  • Expand categories: enter new ones, expand share of wallet
  • Sell services: move beyond products, provide solutions
  • Customer intimacy: must cascade throughout the entire organisation