A global market survey conducted by Satair found that even though the majority of aircraft part buyers use digital marketplace solutions, many find them unreliable and difficult to navigate.
The industry downturn brought about by the coronavirus pandemic has changed customer behaviour when it comes to the buying and selling of aircraft parts. Many airlines and other buyers of parts have chosen to reduce their parts inventory and instead rely on digital marketplaces to procure the parts they need when they need them.
To better understand the shift toward digital parts marketplaces, Satair conducted a global market survey by reaching out to some of our global customers. What we found was that, while many buyers are comfortable using digital marketplaces to purchase aircraft parts, there is a need for marketplace solutions that are intuitive, easy to use and trustworthy.
According to the survey, a combined 73 percent of buyers use popular aviation marketplaces to purchase parts. But more than a third of surveyed buyers said that their biggest pain point was a lack of proper certification or paperwork. The missing certification was even identified as a bigger concern than pricing.
When asked what they want in a digital marketplace, 20 percent of buyers said the platform should be easy to use, followed closely by the 16 percent that said that ensuring seller reliability was their biggest need.
Allan Uldahl Riis, the Director of Commercial Strategic Programmes at Satair, isn't surprised that buyers were concerned about reliability. He says certification and traceability are incredibly important in the aviation industry.
“Buyers want to know that they are getting a genuine, certified part. And when they’re buying used parts, they want to be able to see a record of how it’s been used and copies of any applicable repair reports,” Riis says. “We encourage all of the sellers who use the Satair Marketplace to make all of the paperwork related to their parts easily available for interested buyers.”
Some digital marketplaces have a problem with what are known as ghost listings. These are parts that a buyer lists as having on stock when in reality, they either don’t have it at all or can only access it through a partner once an order is placed.
“This can be very frustrating for buyers, especially if they don’t have any buffer stock. They will spend a lot of time and resources looking for the part and then entering into a dialogue with the seller, only to discover that the part was never actually available,” Riis explains.
The Satair Marketplace only offers parts from either Satair’s own stock or from approved third-party sellers. While Satair cannot force sellers to upload their traceability documents, Riis says that the vast majority of them do it voluntarily.
Thirty-six percent of respondents identified paperwork and certification as their biggest buyer pain point, but pricing concerns weren’t too far behind with 23 percent of buyers saying that it can be difficult to get the parts they need at the right price.
The Satair Marketplace allows for a transparent end-to-end process between buyers and approved third-party sellers. It's easy to search and find the needed part and to know exactly what they are getting because they can see photos of the part, find its serial number and any applicable test reports. Sellers can choose to either display the price of a part upfront or allow interested buyers to request a quote. Buyers can also choose to place a bid on a part even if there is a listed price.
They can follow the status of their bid and if it is accepted they can also track their order all the way through to delivery. If they need to contact the seller about anything related to the process, they can do so directly through Marketplace.
Riis said that these open lines of communication help create transparency for both sides. This also extends to pricing. Because both buyers and sellers can get an easy overview of supply and demand, both sides are also able to determine the fair market value of specific parts.
“Particularly when it comes to non-factory new parts, the price will be very much dependent on what is out in the market. If there is plenty available, the price will go down,” he says. “Being able to easily determine the fair market value keeps buyers from paying too much and also lets sellers take advantage of market scarcity to increase their margins."
The ability to easily compare prices is especially important for buyers in light of the cash flow and staffing challenges created by the pandemic. Many airlines have shifted to buying parts ad hoc rather than in bulk, but at the same time, there have been job losses within procurement. So buyers now often have more urgent parts needs but fewer resources to address them. A digital marketplace that provides easy comparison shopping and facilitates some of the correspondence between buyer and seller can help address both issues.
“Digital marketplaces enhance a buyer’s ability to make an analysis, whereas with a more manual buying process, it’s very difficult to get an accurate overview of all of the alternatives from hundreds of potential suppliers,” Riis says. “A marketplace that easily connects the systems of the buyers and sellers eliminates a lot of manual, time-consuming work.”
