Understanding the Buyers and the Procurement Process - Alibaba

Understanding the Buyers and the Procurement Process
As a supplier, you need to keep up with the purchase behaviors, attitudes and expectations of the buyers, no
matter big, medium or small. Then you can try your best to meet the buyers' needs and maximize your
business opportunities. Let’s understand the buyers from the following perspectives:
1. Buyers’ types
2. Buyers Procurement behavior
3. How buyers select suppliers
4. How to make more buyers contact you
1. Buyers’ Types
Buyers could be classified by purchasing volume and merchandising types.
Group I: Buyers are small in purchasing volume and tend to purchase general merchandise, such as the small
trading companies or buying agents.
Group II: Buyers are big in purchasing volume and purchase general merchandise, such as supermarkets like
Wal-Mart, Carrefour.
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Small Volume

Group III: Buyers are small in purchasing volume, but they know their merchandises very well and purchase
professionally.
Group IV: Buyers are big in purchasing volume and focus on one or a few specific types of products than on
areas, like P&G, Nestle.
It is always good to know what buyer types you are dealing with as different buyer types have different
sourcing approaches, requirements and practices to suppliers.
And for those buyers visiting Alibaba.com, we have the following buyer analysis.
Purpose of Visiting Alibaba.com
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Data source: Alibaba survey on Sep 2010 and Oct 2011
50.9% of buyers expected to carry out business procurement on Alibaba.com, but almost 90% of them
preferred to search instead of posting request.
------ It’s important for suppliers to maximize exposure and get higher ranking.
Procurement size on Alibaba.com

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Data source: Alibaba survey on Sep 2010 and Oct 2011
68% of business procurement was in small amount, probably due to the current international economic
situation. However, extra large amount took up 17.8% which was the second runner up.
------ Demand for large transactions is still significant.
Remarks:
In the survey, buyers were divided into the following 3 groups.
Big Buyers: Annual purchase volume of the company reached 10 million US dollars or more.
Medium Buyers: Annual purchase volume of the company reached 1-9.99 million US dollars.
Small Buyers: Annual purchase volume of the company reached 100-990 thousand US dollars.
2. Buyers Procurement Behavior
Process of international procurement

In Apparel industry, it can take up to 6 months for completing the procurement cycle.
And just for ‘finding supplier’ stage, we can further review the process as follows:
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Buyers usually spend 52% of time on searching and finding supplier during the whole international
procurement process.
------ Supplier should try to optimize their product information in order to shorten the sales cycle.
Time allocation for international procurement
Buyers have to spend a lot of time and energy on searching and finding the right suppliers
It can take up to 2 months for a buyer to decide which supplier to work with.
------ Supplier should stay patient and provide as much information as possible in order to shorten the buyer’s
decision process.
3. How Buyers Select Suppliers
What buyers concern most at each phase?
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Data source: Alibaba buyer survey on supplier selection, Jun 2011
48.7% of buyers claimed that “Product Information” was the most concerned in the filtering process.
------ Supplier needs to pay attention to the details of a product that buyers concerned most, and try to
improve posting at the same time.
Buyers paid less attention to the factors of Company Info in the filtering stage. However, the Company
info was very important in the contacting stage. According to the Buyer Survey, the Product was still the
first important factor, while the second most important one in considerations was Company Info.
---- Suppliers are strongly suggested to offer more company information on Alibaba.com other than product
information.
In the Placing Order stage, the Terms were the most important factor. And within Terms, the shipment
was the most important one. Generally speaking, on-time delivery, good delivery without product
damage and correct delivery in product quantity were the three most important factors of
consideration to all buyers. There is no obvious difference among various types of buyers.
“Quality Supplier” in a buyer’s point of view:
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Data source: Alibaba buyer survey on supplier selection, Feb 2011
In selecting suppliers, buyers concern the ‘aspiration’ the most.
- - Suppliers need to give prompt and proper responses.
- - It’s always a good practice to provide easy access to buyers, like staying online via TradeManager.
Credibility is the second important criterion.
- - No restricted or banned products should be sold.
- - Clear of disputes and long year of membership can help give buyer more confidence.
Company & Product Specialty also helps draw buyers attention.
- - Detailed company profile and introduction can help explain to buyers your specialty and strength.
- - Good categorization of products and showing special and unique design of products can also attract buyers.
5. How to Make More Buyers Contact You
Alibaba did a survey to understand why buyers selected some suppliers but not others. Let’s review the below
findings and avoid having the same mistakes.
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Data source: Alibaba internal study on buyer conversion on search result page, Aug 2011
Data source: Alibaba internal study on buyer conversion on search result page, Aug 2011
High MOQ is the main reason for a buyer to give up on a supplier on product details page.
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------ Due to current global economic situation, supplier should be more flexible on MOQ.
Ranking of Buyer Satisfaction:
Supplier with high aspiration is considered as quality supplier in a buyer’s point of view.
1. Suppliers need to improve their inquiry response rate and the inquiry reply content in order to gain
good impressions. Because competition online is quite intense, the buyer may receive many quotations
for one inquiry. So if possible, suppliers are suggested to reply the inquiries within 24 hours after
receiving them.
2. Suppliers are suggested to make the quotations more specific and attractive, such as competitive
price, quality goods, convenient payment, etc. Buyers on Alibaba.com receive lots of quotations every
day and tend to ignore simple or unattractive quotations.
3. Being online is also a strong sign to buyers that you are ready to trade on Alibaba.com. On
Alibaba.com, buyers could also filter out those suppliers who are online with TradeManager.
4. The more a member signs in “My Alibaba”, the more inquiries he tends to get from Alibaba.com. This
is partly because buyers prefer to trade with those who are ready and active suppliers on Alibaba.com.
Therefore, the more active you are with your account, the more exposure you may have in buyer search.
62% of buyers concern about the “Validity” of the supplier’s business.
------ Trustworthiness and creditability of supplier information are the 2 top factors to make a buyer satisfied.
3rd party verification and other certificates can help increase buyer’s confidence in suppliers. It can also be a
consideration in a buyer’s decision process when placing order. Verified Members have passed authentication
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and verification by Alibaba.com and tend to be more trustworthy. Supplier should put more efforts on 3 rd party
verification and certification in order to be outstanding among other competitors.
Buyers usually spend 52% of time on searching and finding supplier during the whole international
procurement process.
------ Suppliers should try to optimize their company information in order to shorten the sales cycle. Your
Company Profiles appear on your Alibaba Company Websites and tell potential buyers your company name,
business type, the kinds of products/services you offer, and other background information. Buyers who visit
your Alibaba.com websites are evaluating you as potential trading partners, so your Company Profiles should
be complete, accurate and positively reflect the nature of your companies. Make your Company Profiles
more attractive so you can stand out from other suppliers. Some buyers expect more about product
innovation, design, and product certificate. You are suggested to list all of your certifications on your
Alibaba.com website to attract your potential buyers.
50.9% of buyers expected to carry out business procurement on Alibaba.com, but almost 90% of them
prefer to search instead of posting request.
------ It’s important for suppliers to maximize exposure and get higher ranking. Product quality and product
material are the general factors that all buyers concern. List more information of your products will help you to
win more business opportunities. Product Details are the standardized product features and parameters. It can
help your potential buyers searching your products quickly. Filling up complete product details can also help
you to get a higher listing ranking. Information such as payment term, shipping terms and supply ability should
be completed as much as possible.
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