What Concerns Buyers Most When Sourcing New Suppliers?

Date: January 20, 2015

What Concerns Buyers Most When Sourcing New Suppliers?

Do Buyers and Suppliers Speak the Same Language?
Differing Perceptions of Buyer Concerns

TG infographic

Tradegood is a global sourcing platform that enables buyers to connect with a network of verified suppliers.  With a strong focus on helping to create strong business relationships between our customers, we are keen to explore the ways in which efficiency can be increased for both buyers and suppliers.  With this in mind, we conducted a survey looking into the relationship between these two groups.  The survey was designed to determine what suppliers deemed the most important factors to buyers when choosing a supplier, and how these perceptions differed from the opinions of the buyers themselves.  The options given were cost, compliance, minimum order quantity (MOQ), product portfolio and verified seller profile.  The survey was sent out via email direct marketing, and the results were collected between November 20 and December 16.  Replies were received from a total of 166 buyers and 179 suppliers, with the data providing some interesting insights into what each group considers the most important factors in such a supplier-oriented sourcing process.

Perhaps the most unexpected finding was the discrepancy between the perceived importance that each group placed on cost as a factor in the decision-making process.  The majority of suppliers (40.2%) assumed that this would be a major concern for buyers; in fact, however, cost came third in the buyers’ list (19.3%).  This may seem odd given the current economic climate, which inevitably makes price a deciding factor that can make or break buyers.

However, the factor deemed most important to buyers was finding a supplier with a large and varied product portfolio (28.9%); this in itself can reduce overall expenditure as it can ultimately reduce transportation costs for the buyer, as well as the time and money spent sourcing alternative suppliers.  Indeed, choosing a supplier with temptingly low rates could result in a warehouse full of unsaleable items of poor quality, and there have been innumerable stories posted on social media which detail how buyers have wised up to the fact that opting to pay a bit more in the short-term could ultimately equate to bigger profits. 

Clearly, this rationale has yet to feed back to suppliers who still base their assumptions on the somewhat outdated notion that the best way to attract buyers is by driving prices down. Only 22.4% of suppliers considered product portfolio a buyer-oriented deciding factor. Perhaps this discrepancy in their respective perceptions is unsurprising, given that, for the most part, their first contact with the buyer is centered around price enquiries and negotiations. So, by the time the buyer reaches out to them, it can be assumed that they have completed their own independent research (including the other factors in this survey) and so the supplier is naturally led to believe that their customer's decision is all down to cost. Finding a supplier able to provide the exact product requirements is vital to buyers.  It saves both time and money, and it ultimately enables the buyer to build a strong business relationship with its supplier.

Another large variance exists between buyers’ and suppliers’ attitudes regarding the importance of compliance.  The survey results suggest, according to suppliers, that this is almost something of a moot point for buyers with just 14% of suppliers attaching weight to this factor.  Interestingly, however, it was the buyers’ second most important factor. Perhaps suppliers incorrectly assume that buyers see the issue of compliance as none of their concern; that suppliers should handle any red tape in this area. The individual supplier’s sense of ethical responsibility is evidently a crucial factor for buyers. The importance that buyers attach to compliance, when choosing their suppliers, may be because a company with a lax attitude towards a supplier’s regulatory compliance can suffer dire business-related consequences further down the road.  It is also logical to assume that a supplier that is indifferent to government legislation will not be one capable of high-quality service in aiding buyers on their journey within the global sourcing arena. In addition, the discovery of a non-compliant supplier can severely damage the buyer’s actual brand image within the market and the brand loyalty of its customers. Consumers are increasingly demanding for more socially responsible brands. Therefore, it is likely that reputable, world-renowned buyers, brands and retailers will regard compliance as an increasingly important factor in the years to come.

Verified supplier profile consists of key verified supplier information, all of which is required to maintain a business relationship between buyers and suppliers. This includes the supplier’s identity information, banking details and the supplier’s third-party relationships. Although having a verified profile ranked comparatively low for buyers at 19.3%, its importance was further underestimated by suppliers (14.5%).  Clearly, this is something that would be more of a consideration for buyers in their decision-making process than suppliers have always assumed, especially if the buyer has to deal with a supplier who is based in a remote location.

Finally, both groups agreed that minimum order quantity was the least important factor, although suppliers (8.9%) gave it slightly more weight than buyers (6%).  The reasoning behind this small discrepancy may again tie in with cost, in that suppliers assume buyers want the lowest possible quantity in order to minimize outgoings, when buyers in fact are more inclined to focus on finding the right product types that meet their specific requirements. 

Overall, it is clear from the survey results that finding a supplier with a wide range of products in their portfolio is a key selling point for most buyers.  Cost will always remain important, but buyers seem to have become increasingly aware that homing in on price exclusively is unproductive and unlikely to yield good value for money. Thinking from a buyer's perspective can be a valuable tool for suppliers in ensuring that their business is as attractive as possible to all prospective clients.


Marketing – Pride & Ferrell


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