October 28, 2013, 2:46 PM

Staples expands e-commerce via marketplace sales

The office supplies chain plans to offer more than 1 million SKUs online.

Lead Photo

A Staples kiosk.

Staples Inc. is on the verge of greatly expanding its online business-to-business and consumer product offerings to more than 1 million SKUs. That’s up from about 200,000 today and would include categories such as power tools, medical devices and garden supplies as it prepares to go far beyond its core office supplies market and begin channeling sales from third-party sellers as well as handling its own sales on the chain’s redesigned e-commerce sites, says Faisal Masud, executive vice president, global e-commerce.

“Within a year and a half, our goal is to have more than a million SKUs available to online customers,” he says. Staples will handle the expanded product lines sold through Staples.com, Staples.ca and its business-to-business site StaplesAdvantage.com through a combination of its own sourcing and fulfillment, drop-shipping by suppliers and products offered by third-party sellers through a new e-marketplace set-up on Staples e-commerce sites.

Although the expanded product line will be available to both consumers and business customers who buy under contracts, Staples is emphasizing its expansion of product offerings to business customers.  “Businesses have lots of needs beyond office products, and that’s what we’re going after,” says Masud, who sits on the company’s executive committee of top management. “Businesses may need hard hats or networking technology, or products for their employee break rooms. We’ll be covering any business needs.”

Masud joined Staples this year from the senior e-commerce position at Groupon Inc.’s Groupon Goods and is a former executive of Amazon.com Inc. and eBay Inc. 

Staples, which says it carries 8,000 SKUs in a typical Staples store, does not plan to stock its stores with the expanded product lines. The chain operates more than 1,500 stores in the United States, Masud says. Instead, in-store shoppers will be able to order any products through online kiosks to have them shipped to their home or business addresses or to stores for in-store pickup. Expanded product lines on Staples e-commerce sites already include items such as power tools and doctors’ stethoscopes, with more to come, the company says. Staples will consider the local customer demand in each of its stores while building out its merchandise offerings, Masud says.

A Staples spokesman says it’s too soon to provide more details on how the company will operate its new marketplace or when it will begin to host third-party sellers, but he adds that one example of how it could operate are the sales of some products through Staples office products subsidiary Quill.com from online mass merchant Wayfair.com that started in July. Quill.com is featuring Wayfair products including small appliances, exercise equipment and outdoor furniture, with Wayfair handling the order fulfillment. Wayfair is No. 52 in the Internet Retailer Top 500.

Industry analysts say the retailer’s new strategy is important for a “category killer” like Staples that must branch out beyond its traditional core category of office supplies. “I’m not surprised by the move,” says Nikki Baird, managing partner at research and advisory firm Retail Systems Research LLC. “Category killers can no longer lay claim to having the ‘deepest assortment’ in any given category. The natural move is to expand the online assortment to bolster the in-store range.”

By offering products sold by third-party sellers through an e-marketplace, however, Staples will be competing with already established and dominant marketplaces operated by Amazon.com and eBay Inc., adds Retail Systems Research managing partner Paula Rosenblum. She suggests Staples could better capitalize on its strong brand by selling more private label products rather than channeling sales by other sellers.

Andy Hoar, an analyst who follows B2B e-commerce at Forrester Research Inc., says the new Staples strategy is another example of how business-to-consumer and B2B markets are merging more closely together. Still, he adds that Staples will need to develop effective strategies for getting its traditional buyers of office supplies as well as contractors to buy things like power tools, and it will need to offer a high level of customer service across its new product categories without over relying on margin-cutting low prices as it competes with low-price leaders Amazon and eBay.

In the meantime, to help make it easier for its customers to shop online amid the expanded product lines, Staples last week launched a redesigned Staples.com, No. 2 in the Internet Retailer Top 500. The new design is paving the way for Staples to go far beyond its traditional market of selling office supplies and take a broad jump into serving more business customers with just about anything they need to run their operations, Masud says.

The site redesign, which also applies to the company’s Canadian site, Staples.ca, is meant to make it easier and faster for both business and consumer customers to find what they need among products and services. That includes Internet-hosted or “cloud-based” payroll and accounting software for businesses, medical scrubs and tools for hospital staff, cash registers for retailers, binding machines for schools to publish manuals—and, of course, pens and ink cartridges and countless other office supplies for everyone, Masud says.

A new navigation bar across the top of every web page lets visitors shop by Products, Technology, Services and Industry. Consumers also can click to view coupon deals or to use an Easy Reorder section to repeat or modify past orders.

Although Staples is second only to Amazon in the Top 500, its $10.3 billion in web sales in 2012 fell 2.8% from 2011, according to the Top 500 Guide. With its redesigned site, it’s gearing up to better compete against Amazon as well as other retailers  and wholesalers with an e-commerce site that offers customers more personalized content and faster shopping and fulfillment services, Masud says.

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