The world’s biggest online seller Amazon.com announced earlier this week that it has opened a new office supplies mini-store that will stock half a million products for the SOHO market, the classroom, the corporate office "and everything in between".
Does this mean the end is nigh for US office suppliers and they may as well sell up now?
Not just yet.
"But hang on a minute, didn’t the share prices of the ‘Big 3’ office suppliers plummet on the news that Amazon was entering the market? The analyst community obviously thinks Amazon is going to prise serious market share away from Staples, Office Depot and OfficeMax.
Well, their share prices did fall at the start of the week – just like about every other player in the US retail sector. The blip in the share price of office suppliers on Tuesday morning can be seen virtually across the board, including the Dow Jones itself.
Let’s not get too carried away into thinking this was due to Amazon entering the office supplies market!
And while Office Depot’s and OfficeMax’s share prices have continued to slide this week – by 10.6 percent and 17.1 percent respectively in the last five days (gulp!) – this has more to do with worrying economic and consumer data, pessimistic analysts and Staples impending tie-up with Corporate Express than anything else.
So then, what’s new?
Amazon has been offering office-related products for as long as I can remember. What’s new about this office supplies store?
opi.net asked Amazon.com’s director of merchandising for computers and office supplies, Chris Rupp, to explain.
"Expanding our retail presence in the office supplies space is a natural extension of our consumer electronics business," said Rupp.
"In the past, Amazon has primarily sold office supplies (pens, paper, pencils, etc) through third parties listing products on our site.
"Amazon has sold many related products, like office electronics, software, and office furniture. For this launch, we have rolled out a new office supplies store that improves the shopping experience for customers by adding selection, making thousands of products ready to ship in 24 hours, and making it easier for customers to find the products they are looking for at a very detailed level."
Certainly, Amazon has a lot of things going for it – what Chris Rupp calls shopping "the Amazon way" – one convenient shopping destination, broad product selection, cheap prices, easy navigation, a single shopping cart, customer reviews and robust product information.
And while there are aspects of Amazon which office suppliers can learn from – take recent improvements in product information and the introduction of peer reviews by wholesalers – one can’t help thinking that Amazon is spreading itself a bit thin on this one.
Take the product selection for example.
Half a million products is certainly a mind-boggling figure, and while Amazon says that it is easy to find items, I certainly felt frustrated when trying to track down products.
It’s OK when you know a specific product name, but browsing categories can be a bit mind-numbing when, taking the example of ‘copy paper’, you have 21,836 results!
Furthermore, the 500,000 figure includes not only those products sold and shipped by Amazon, but also those shipped by third parties.
This means that you normally have to filter out different sellers if you don’t want to be hit by multiple shipping charges.
And there are a few bugs in the system – I tried selecting an item apparently sold by Amazon.com, only to find that, in fact, it was sold and shipped by another merchant.
So, how does Amazon compare on price?
Pretty well as it turns out.
I took a number of common items (very unscientifically, I might add, by looking around my office and thinking what I needed) and compared the prices between Amazon (sold and shipped by Amazon), the cheapest third party seller on Amazon, Staples and Shoplet.com.
The items were an HP78 inkjet cartridge, a Fellowes P-57Cs shredder, a Canon Powershot Sd1100 digital camera, an HP Quickpack box of 20lb white copy paper, a set of 6 Expo board markers and a 6-dozen pack of Dixon Ticonderoga Yellow #2 HB pencils (I didn’t actually need these, but assumed that as they’re the number one selling pencil in the US, that all the sites would have them in stock).
Amazon’s own store did the best deal for the shredder (by a long way) and for the digital camera; a third party seller was the cheapest for the inkjet cartridge (though there wasn’t a lot of difference between any of them); Shoplet gave the best deal on the markers; and Staples was the best placed for the copy paper and the pencils (Amazon was the only other site to offer the pencils in bulk).
If this reveals anything, it’s probably what most home and small office online consumers know already – that traditional office suppliers aren’t always the most competitive when it comes to more expensive technology products.
But on the other hand if do you buy a selection of items from the cheapest sellers on Amazon, you will get several consignments for one order from many different sources. Not exactly the most efficient or you would think the most environmentally acceptable approach these days (and downright annoying to have multiple couriers or mailmen delivering to your door according, says one disgruntled Amazon shopper).
While Chris Rupp told opi.net that Amazon is targeting a wide range of customers including smaller to medium sized business customers, it would seem, in the short term at least, that those most likely to purchase office supplies on amazon.com are those who are looking for a specific technology-related item where Amazon is already an established player or the home consumer who adds a few supplies to his/her order after shopping for something else.
As Chris Rupp says: "Customers can not only shop for pens, pencils, software, printers, ink, etc, but they can also pick up a book, power tools, video games, bedding, pet supplies, sports equipment, jewellery, apparel and anything else they may want to buy online – all in a single shopping cart, from the comfort of their own home."
Which is the great strength of Amazon, but not yet about to sound the death knell of a specialised and dedicated office supplies channel.