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Amazon lands another big deal--this time with Office Depot
Targeting individual buyers of office supplies, Office Depot has launched an online store at Amazon.com. Office Depot hopes the deal will help it tap personal buyers of office supplies, who spend $90 billion a year on such items.
Targeting individual buyers of office supplies, Office Depot Inc. has launched an online store at Amazon.com. Office Depot, which already operates one of the most successful retailing sites on the Internet, says individuals, as opposed to businesses, spend $90 billion a year on office supplies and the Amazon agreement gives the company entrée to that market. “There is upside opportunity for us to introduce Office Depot to the Amazon market,” Monica Luechtefeld, executive vice president for e-commerce of Office Depot, tells Internet Retailer. “Personal shoppers may think of going to an office products site a few times a year. But Amazon is a destination site and people use it multiple times in a week or a month and so the Amazon traffic is of interest to us.”
Amazon will provide the store space at Amazon.com and handle all web interactions with the customer and process the payment. Office Depot will fulfill all orders from its 24 distribution centers and handle all product-related customer service, including returns. Office Depot will pay a commission on sales to Amazon.
The two companies hope to make the arrangement reciprocal--not only will Office Depot products be available at Amazon.com, but Amazon business books and software eventually will be promoted at OfficeDepot.com, which is on track this year to do $2 billion in sales, Luechtefeld says. At the end of October, customers will be able to pick up the most popular items at Office Depot’s 820 stores.
Office Depot and Amazon will promote the office products stores using Amazon’s marketing infrastructure, including e-mails and newsletters. Eventually, the two will promote the site around seasonal events, Luechtefeld says.
The deal could benefit both Amazon and Office Depot, says Duif Calvin, vice president in the retail practice of consultants Scient Inc. Not only does Amazon’s traffic benefit Office Depot, she says, but its e-commerce system is well suited to sale of commodity products. “Amazon’s platform is good at putting commodity products in front of consumers and suggesting additional sales,” she says. And for Amazon, the deal is another way to make money without having to engage in expensive retailing activities. “Amazon needs to find a way to turn what they do well--providing a platform for high-volume sales--into something that makes money,” Calvin says. “This is a very good fit for Amazon in terms of what their platform can do.”
Amazon already has e-commerce deals with Toys R Us Inc., Target Corp. and Circuit City Stores Inc.