This is from the Procurement 2020 digital report. To download the full report, go to www.amazonbusiness.eu/procurement2020
Millennials, that much-maligned generation, are changing the face of procurement. Their buying habits – from mobile usage to writing reviews – are challenging suppliers to improve the purchasing experience. These digital natives, now reaching their prime working years, are looking for the same wide choice, transparent comparison and rapid delivery that has come to characterise consumer buying.
Some 73 per cent of 20 to 35-year-olds are involved in product or service purchase decision-making at their companies, according to a study by Merit, a US brand and marketing consultancy, while a survey from Google/Millward Brown Digital found that about half of all business-to-business product researchers are digital natives.
“The business world has lagged behind consumer trends, but it’s quickly catching up,” says Bill Burkland, head of Amazon Business UK, a business procurement platform. “People are bringing B2C expectations into the B2B world: ease of use, personalisation and integrated information about the products.”
People are bringing B2C expectations into the B2B world: ease of use, personalisation and integrated information about the products
Perhaps, given that Amazon is one of the global companies that revolutionised consumer buying habits in the first place, it is no surprise that Amazon Business is doing the same in the corporate world. The company, which launched just over a year ago in the UK, sees scope to extend the opportunities that its technology model offers.
“Procurement managers have so many challenges; from cost reduction, to speed of delivery, to rationalising their supplier bases,” says Mr Burkland. “One we hear a lot is that they need to spend more time managing strategic supplier relationships and a lot less time managing tail spend.”
‘Tail spend’, the small, sometimes insignificant-seeming purchases that often fall outside the procurement management process, can loom large in terms of both time and cost. It might only constitute 10 per cent to 15 per cent of total spend, but can amount to 85 per cent to 90 per cent of suppliers; a chaotic mix of purchases driven by mavericks who find traditional procurement processes unwieldy, slow and difficult to use. According to a report from Spend Matters, a procurement and supply chain blog, 41 per cent of procurement groups said that requisitioners simply didn’t understand the process, policy or system, and 34 per cent said they went rogue because other buying channels, like e-marketplaces and purchasing cards, were easier to use.
“This has been a chronic problem for years,” says Mr Burkland. “Managing a supplier database requires time and money. But technologies have emerged, such as e-markets, that are an incredibly efficient way to procure everything you need.”
From the supplier’s perspective, Amazon Business offers access to a wider world for many businesses, which are no longer limited to local markets. If the product or service is right, even a high street micro-business can compete in and supply to the B2B market.
On the other side, for a small business with limited negotiating or purchasing power, the availability of 100 million-plus products from more than 30,000 sellers through Amazon Business offers a significant procurement advantage. Spending can be managed centrally, with the ability to restrict purchases by category (such as alcohol) or set spending limits. The e-marketplace can be integrated with an existing purchasing system; and comes with analytics that enable the procurement manager to review spending more easily.
“The beauty of it is its efficiency,” says Mr Burkland. “The traditional system demands that purchases over a certain size require three quotes – but there’s still a real lack of transparency. Just because you have three quotes doesn’t mean you can understand the supplier’s reliability, or the quality of their offerings. With us, you can see multiple offers from multiple suppliers; you can read other buyers’ reviews and see delivery speeds and costs. Everything you need is in one place: it’s not so much that it changes the process, but that it transforms it.”
Just because you have three quotes doesn’t mean you can understand the supplier’s reliability, or the quality of their offerings
Further advantages come from ease of access, with the ability to buy from any connected device. A recent Boston Consulting Group study found that nearly half of Amazon purchases in 2017 were made using mobile devices, a figure that is set to grow. Google and PayPal forecast that by 2020 around two thirds of UK online retail – worth around £43 billion annually – would be conducted via mobile, with four in five transactions involving a smartphone at some point in the purchase journey.
“People are using their mobiles out of convenience – they are no longer tied to a desktop or even a laptop,” says Mr Burkland.
The Boston Consulting Group study found that 80 per cent of B2B buyers are using mobile at work, and over 60 per cent report that mobile played a significant role in a recent purchase. Moreover, some 70 per cent of B2B buyers increased mobile usage significantly over the past two to three years, and 60 per cent expect to continue to increase their mobile usage.
With millennials moving up the hierarchy at work, it’s clear that their expectations of service and choice are heading for the C-suite. Procurement managers have a tough job, but the companies that recognise millennials’ demands can make it a lot easier.
This is from the Procurement 2020 digital report. To download the full report, go to www.amazonbusiness.eu/procurement2020
