COVID-19: Impact on global industrial buying habits and supply chain

A country’s culture has been found to dramatically impact industrial buying habits during COVID-19, according to research published this week by the ESMT business school in Berlin, Germany.

Olaf Plötner, Professor at ESMT Berlin and director of the centre Bringing Technology to Market, and colleagues, studied how industrial customers’ purchasing behaviour had changed, investigating 31,353 sales opportunities with a global machine tools manufacturer across 57 countries.

Overall, the coronavirus was found to have significantly decreased the likelihood of industrial customers making a purchase, particularly higher priced products or solutions. However, the likelihood of a customer making a purchase was less affected in countries with low uncertainty avoidance and strong long-term orientation, such as the UK, China, India, Sweden, and Singapore. These cultures are more likely to embrace unexpected events and emphasise focus on the future.

The researchers said they found that the likelihood of customers making a purchase increased for low-priced offerings if they were from cultures characterised by high uncertainty avoidance and low long-term orientation, such as Brazil, Mexico, Poland, Spain, and Argentina. These cultures do not tend to appreciate uncertainty or ambiguity and tend to focus on the short-term. Furthermore, although sales of hardware-based products have decreased worldwide, sales of software/digital services have increased.

Professor Plötner said his findings may have implications for the supply chain.

“In certain cultural contexts, the pandemic increases or decreases purchase probability depending on the price of the offering. These findings have implications for how suppliers can secure business in different countries during unprecedented global shocks, such as the coronavirus pandemic," he explained. "For countries like China and India, suppliers should focus on sales opportunities for high-priced offerings and prompt customers to plan beyond the crisis. On the other hand, for countries such as Brazil and Mexico, suppliers should focus on sales opportunities for low-priced offerings, such as spare parts, which they would need for maintaining operations during supply shortages."

The global manufacturer in the study is known for selling machine tools, conducting repairs, maintenance services, machine programming, enterprise software, Industry 4.0 consulting services and automation solutions.

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