STAPLES, Inc. Group 3 Introduction • Staples was founded in 1986 by Thomas Stemberg • It is currently the #1 office retailer. • Staples has annual sales of 11.6 Billion Dollars and employs over 58,000 workers worldwide in over 1494 stores in the US, Canada, UK, Germany. • Approximate stock price $26.00 /share Products / Services • Office supplies • Furniture • Technology items (printers, faxes, copiers, computer components, customized PCs) • Custom printing • Business services (such as printing, staffing, HR management, payroll, employee motivation, communications – such as broadband and dialup, web presence, software training, sales and marketing support) Sales per Category • Office Supplies; services and others – 42% • Office Automation (Copiers; fax, …) – 30% • Computers and associated products – 21% • Office furniture (desks, chairs, ..) – 7% Multi-Channel Capabilities • Retail through brick and mortar stores • Mail-order via Catalogs • In-store Kiosks offer customers a chance to checkout a one central location, pay for online and offline purchases at one time, order customized computers, and access over 80,000 products most of which are not available in brick and mortar stores. • Online through Staples.com, Quill.com, and StaplesLinks.com (e-procurement) STAPLES.com StaplesLink.com • Allows e-procurement and e-commerce transactions to happen almost seamlessly. • In under 30 days Staples can seamlessly integrate any e-procurement system to StaplesLink.com without time-consuming manual processing or custom re-engineering • Currently, some 20,000 organizations use StaplesLink and growth is expected to continue. • Stapleslink offers: immediate access to 80,000 products, the ability to consolidate orders, track online and offline orders, manage users and usage, and generate reports on spending. StaplesLink.com Continued… • Aberdeen Group vice president and research director Kent Allen, cites StaplesLink as one of the leading sites in collaborative commerce. • According to the Aberdeen Group, eprocurement ventures have been hit or miss (http://www.crmbuyer.com/perl/story/21002.html) • StaplesLink has been a rare exception, netting increases in revenue, sales, and customer retention. Competitors • Office Depot • OfficeMax (Boise-Cascade purchased OfficeMax Dec ‘03) Mergers and Acquisitions • Staples made an attempt at horizontal integration by trying to purchase Office Depot which was blocked by the FTC. • Staples acquired Quill, a mail-order office products company, in 1998 • Acquired Medical Arts Press (2002) which sold $168 million worth of office supplies to doctors, dentists and veterinarians. • Guibert – acquired in OCT, 2002, mail order supply company. Staples Inc. Financial Highlights 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 $ $ $ $ $ $ $ $ $ $ $ $ Sales Net Income 1,041,636 $ 18,318 1,308,634 $ 19,452 2,000,149 $ 39,940 3,068,061 $ 73,705 3,967,665 $ 106,420 4,493,589 $ 144,742 5,732,145 $ 167,914 7,123,189 $ 185,370 8,936,809 $ 314,988 10,673,671 $ 59,712 10,744,373 $ 264,970 11,596,075 $ 446,100 Sales $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $- 92 94 96 98 00 20 19 19 19 19 Net Income $500,000 $400,000 $300,000 $200,000 $100,000 $- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20 02 2002 2003 #1. What is the strategic business value to Staples and their large business clients of the new web-based procurement system? #1 Answer • Value to Staples Staples gets higher quality consumer data from its electronic procurement system, lower costs due to lower maintenance/customer service/and ordering costs, ability to lock in customers through dependency on their ordering system (switching costs), larger product offering of 80k items, and differentiation of services from its competitors. • The e-procurement system helps large corporations by controlling the ordering process, reducing costs of products, and providing companies with a fast effective way to order and reorder. #2. What is the strategic business value to Staples and the value proposition to their consumer customers of Staples new clicks and bricks capabilities? • Advantages to Staples Through brick and mortar stores, kiosks, and the website, Staples has access to clients through multiple sales channels. Staples is able to offer over 80,000 products without stocking each item thus reserving shelf space for the hottest selling items. Staples also offers innovations such as customized PCs available for order via kiosks or the website. Kiosks and web transactions can readily be tapped for valuable market and inventory data. • Values to consumers saved customer profiles, ordering convenience, larger selection of products through kiosks and the website, and the ability to consolidate purchases and choose multiple ways to make purchases in the store. #2. Answer #3. What other e-business or e-commerce strategy would you recommend to Staples to help them gain a competitive advantage in their industry? Visit their website and those of some of their competitors to gain ideas. Defend your proposal. #3 Answer • Staples could implement an RFID system so that inventory was more automated. Items containing RFID tags can reduce time spent on inventory ordering and tracking by automatically relaying stock data to store computers and eventually on to suppliers. An RFID system is perpetual in nature, lowering costs and reducing staff requirements.