As part of a plan to cut costs by $500 million, Staples says it plans to close up to 225 North American stores by ...
The Web Means Business
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Build a box
While consumer-oriented web sites let shoppers design their own T-shirts and coffee mugs, then quote a price on the spot, it's a tougher task to let a manufacturer or retailer configure cardboard boxes to their specifications and then get a quote for many thousands or even millions of pieces. Aiming to expand sales beyond the upper Midwest, Creative Carton set out to build a web-based box configurator in 2006, two years before the Minneapolis-based company was acquired by Great Northern Corp.
Working with InSite Software, Creative Carton built a design tool that lets a customer configure a box on PackNBoxNow.com and receive an instant quote. That development work took about four months, says Matthew Ruggle, marketing and e-commerce manager at Great Northern.
Offering custom boxes on the web allowed the company to reach customers all over the country, and increased the web portion of company sales from 0.5% to more than 5% in five years. Sales through the web bring higher margins than direct sales to established customers, Ruggle says. To capture more such sales, the company has created several new e-commerce sites, including CreativeDisplaysNow.com for store displays and PackagingSuppliesNow.com and StockBoxesNow.com.
The web technology also allows existing customers to order boxes by signing in to a web-based portal. Big customers, such as retail chain Target Corp. and UPS Stores, can order for shipment to different locations. "Their purchasing departments can run reports to see who is ordering what, which makes it easier for them to order and keep track of inventory," Ruggle says.
At a retail web site, the approval process consists of the shopper clicking the Buy button. But it's more complex when companies or government agencies are making purchases, and b2b web sites have to build in rules so that buying organizations are confident that all purchases conform to the rules they set.
At W.W. Grainger & Co., a distributor of repair and maintenance products, customers can set up rules so employees can use a purchasing card for orders below a certain amount, while larger orders are routed to executives for an okay. In addition, when a purchasing agent signs in to WWGrainger.com, he sees all his orders pending approval and any special pricing on items his company has approved for purchase. He also can click to monitor the status of orders that have shipped.
Customization also played a big role in Staples' redesign last fall of its b2b site, StaplesAdvantage.com, which is aimed at larger corporate and government customers. Staples Advantage, the office supplies chain's b2b unit, generated $6 billion of the company's $10.2 billion in sales in 2010, and 90% of that revenue came through online orders.
In the latest design, when an employee of company XYZ logs in, she sees the XYZ brand on the web page plus a company message board that reminds employees about company policies, such as to buy environmentally friendly products or to avoid small orders that rack up unnecessary shipping charges. A My Orders tab lets the employee see what she ordered previously for fast reordering and to view the status of current orders; if she has approval authority the tab shows orders awaiting her authorization.
As the employee browses products the site suggests alternatives that comply with policies her employer has specified, such as for eco-friendly products or those supplied by minority-owned businesses. The employee can order up to a limit set by her company, or submit an order to the approval process that company XYZ has specified. Managers can consolidate orders across departments to reduce shipping costs, and allocate the costs of a single order across several business units.
The site also incorporates features common to consumer-oriented retail sites, such as subcategories that pop up when the user hovers over a main navigation tab, filtering options that adjust to the category being searched, and links to the entire product catalog from every page. In addition, Staples uses banner ads and featured items boxes to raise awareness that it sells more than office supplies, for example promoting products needed for break rooms and facilities maintenance, says Laura Brooks, vice president of b2b e-commerce at Staples.
The new design is the culmination of two years of customer surveys and testing, and benchmarking against the best e-commerce sites, both those that cater to businesses and those aimed at consumers, Brooks says. While Staples has been continually improving its StaplesAdvantage.com site since its launch in 2000, Brooks says "this is very different in that it's really a full-scale redesign of an experience that blends the two worlds together, a robust procurement solution with the experience of a world-class b2c site."
While Staples' customers are mostly used to ordering through the web, that's not the case at Ingram Micro, where web sales still represent less than 15% of annual sales roughly midway through a four-year project of launching enhanced e-commerce sites in each of the 26 markets in which it operates; seven sites now are live on the company's revamped e-commerce platform.
Ingram has good reason to move ordering to the web, as the costs of an order placed through a call center are 25-30% higher than one submitted online. Plus, customers are better able to negotiate discounts with call center agents than they can with a checkout page. Encouraging customers to order by phone sends a message "that they can get a better price by using a more expensive channel," Newman says. Even when a web site offers lower prices than Ingram's list prices the company comes out ahead as orders move online, he says.