Wednesday, December 10, 2014

STAPLES E-COMMERCE EXCHANGE

Very interesting.  It opens Staples customers to Staples' suppliers.  Interesting idea for a business model.  The suppliers now have the requirement to respond to the new e-commerce using the new supply chain.  Staples does basically nothing after setting it up, except get its fee for the exchange.

How Staples (SPLS) Is Facilitating Suppliers To Reach Customers

At a time when Staples, Inc. (NASDAQ:SPLS) is struggling in the declining office-supplies industry, it is preparing to launch a new online platform, called “Staples Exchange”. The new online platform allows suppliers and vendors to offer office supplies directly to the retailer’s customers.
The new initiative is an opportunity for the struggling retailer to expand its product selection, using a new form of advertisement, and reach out to consumers amid intense competition in the retail industry. Retailers have now started to rely on e-commerce to boost sales, putting an end to the traditional shopping trends, whereby shoppers would queue up outside retail outlets to seek the hottest deals available. Consumers have now begun to depend heavily on online websites to explore the most attractive deals offered.
Retailers used to fret over Amazon.com, Inc.’s (NASDAQ:AMZN) massive online presence but have now started to capitalize on the e-commerce trend by switching their focus online.

With the new platform launched, the company gives manufacturers a direct route to sell their products to customers through Staples’ online property. Staples believes that its online platform is different from other retailers, who have launched a similar service. Staples does not require vendors to use a third party that will implement integration charges. Instead the retailer gives the manufacturers a single portal to be enrolled into all of company’s websites, including its primary Staples.com site.
As per the management, the exchange platform allows suppliers to access a faster channel to integrate their products into the retailer’s stock list. As of now, only a certain sites are accessible but from next year suppliers will be able to utilize the platform to quickly access and introduce their manufactured products to all the company’s websites under its portfolio, including Staples Canada, Staples Advantage, and Quill.com
When suppliers get enrolled they can easily upload their offerings and begin marketing their products, while receiving direct orders from customers, incurring nil costs. Vendors will be provided with real-time access to alerts and tools to handle inventory on their own.
Executive Vice President of Global E-Commerce at Staples Faisal Masud explained that the exchange platform will facilitate suppliers and manufacturer vendors to rapidly integrate operations. This in turn will help the company offer more products and services to their consumers, thus expanding Staples’ product selection and portfolio.
Being part of the sector headed down a waning path, Staples is facing obstacles to maintain top line growth. However, the retailer has taken steps to diversify and focus on managing costs to deliver anticipated bottom line performance during such demanding times.
Earlier this year, the company planned to curtail costs by $500 million over the next two years. So far, the management has been successful in cutting down costs by $200 million. To reduce costs, Staples has planned store closures by eliminating worst-performing stores from its operations.
Diversification has been particularly useful for the retailer at a time when the entire industry is under pressure. Considering the kind of products it sells, Staples has benefited from having exposure to different product segments. Where computers and other technological products have seen a decline in sales, other segments like paper, print, and cleaning services have posted an increase in sales.
Given the pressure from shifting industry dynamics, Staples’ focus to create such an innovative proprietary platform is commendable. By diverting focus toward research and development and rolling out of innovative initiatives, Staples is using technology to favorably impact its relationship with suppliers and to expand the assortment of its products, which in turn will boost sales.