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Millennial industrial buyers look internationally when product sourcing

A fully loaded cargo ship sets sail.

Attitudes toward product sourcing are changing among industrial buyers, with Millennials far more willing to look abroad than their senior counterparts in the workplace.  

That’s a major finding from UPS’s 2019 Industrial Buying Dynamics study, which revealed that Millennials, born between 1981 and 1996, source about half of their purchases internationally. 

This represents a noticeable divergence from the buying behaviors of Boomers and GenXers, who are significantly less inclined to look overseas when sourcing industrial products.  

The demographics of international sourcing

When it comes to global trade, a preference for international sourcing among industrial buyers breaks cleanly along generational lines.  

In contrast to Millennials, 92% of Boomers, those born between 1946 and 1964, prefer to source domestically, while just 20% of GenXers, born between 1965 and 1980, sourced from abroad, the research found.  

Although the majority of the 1,503 industrial buyers surveyed in the 2019 study only source domestically, behaviors around product sourcing are definitely shifting. Attitudes toward international sourcing appear to be changing among respondents of all ages.

When asked about the next 18 months, almost a third of industrial buyers (32%) surveyed said they expected to source products and supplies from overseas. 

And with Millennials representing one in three respondents to the survey and the post-Millennial Generation Z now poised to enter the workforce, it’s reasonable to speculate that industrial sourcing will become even more international in the years ahead.

What factors are driving decisions around global product sourcing?

Buyer motivations when sourcing internationally are varied, but consistent factors are quality, reliability, and cost.  

A decision to source from North America and Europe is often driven by considerations around quality and product reliability, the study found. When sourcing products from Central and South America, Asia, Africa, and the Middle East, an industrial buyer is more likely attracted by product cost.  

The type of product required is another factor influencing a buyer’s willingness to source from abroad. When it comes to industrial equipment, about a third of respondents looked overseas for the right item, for instance. This percentage rose to 39% for maintenance, repair, and operations (MRO) parts and 43% for original equipment manufacturer (OEM) parts.

It would appear buyers are prepared to place a premium on buying exactly the right part with the right level of service wherever in the world that product is available. For example, Europe is a favored destination for the sourcing and procurement of final assembly OEM (19%) and MRO (20%) parts.

Perhaps unsurprisingly, industrial buyers are less likely to purchase janitorial and sanitation (J&S) supplies from overseas, with online marketplaces and domestic distributors continuing to exert a strong hold over that market. When it is easy to source lower-cost products domestically with increasingly fast delivery, there is little advantage for buyers to go overseas for such items.

Challenges faced when buying internationally

All buyers value speed of delivery when sourcing overseas, according to the study. And Millennial buyers have the strongest expectations around same-day delivery, with 95% of this group saying that at least some of their overseas orders require same-day turnaround.

In total, approximately four out of five survey respondents said that at least some of their orders required same-day delivery. This growing need for speed cuts across all ages, with 26% of respondents requiring their international order within two days.  

Despite the focus on express delivery, more than half of respondents remained comfortable with their overseas shipment arriving within a week (35%), or even within a month (21%), of placing the order.

International shipping comes with its unique challenges and is more prone to delay than domestic shipping. This factor is particularly relevant for buyers from OEMs, who tend to do the most international sourcing, but are also more likely to require their products arrive within two days of placing an order. To meet the needs of these customers, suppliers should strengthen their shipping processes to reduce the risk of delay when crossing borders.

Suppliers must also confront the challenge of international returns. The ability to conveniently return goods is cited in the study as a greater concern than payment methods and language barriers when sourcing internationally.  

What this means for the procurement process

If you’re a supplier trying to adapt to the changing landscape of industrial buying, here are some aspects to factor into your logistics planning:

  • Carefully assess the international credentials of the logistics providers you choose. Do they provide the depth of knowledge and extent of resources you require?
  • Determine your shipping strategy upfront. Under what circumstances can you afford to offer free shipping? What is your returns policy for international transactions?
  • Offer a range of international delivery options, including expedited services, to meet different requirements around time-in-transit.
  • Provide clear and helpful online documentation about your products to assist buyer research.
  • Research a range of insurance options for reducing risk when shipping internationally.  
  • Put advance planning at the heart of your logistics plan to minimize the risk of delay when shipping internationally.

As industrial buying habits change, you cannot be too prepared for shifting behaviors.

The good news is that purchasing sentiment appears in good shape. Over the next 18 months, Millennials expect to engage in increased sourcing both at home and overseas. Across all age ranges, six in ten buyers expect their domestic sourcing to stay the same in the coming year and a half, and another third expect it to increase.  

For further insights into what’s driving decision-making among today’s industrial buyers, download UPS’s 2019 Industrial Buying Dynamics study.

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