Staples on tour

Six months after announcing details of its first Chinese venture, Staples moves into more fresh territory with the acquisition of South American reseller Officenet

No one could accuse Staples of standing still. Not content with domination on the domestic front, the company seems bent on spreading its mantra to all corners of the globe.

Hot on the heels of its joint venture deal with OA365.com in China comes the news that it is crossing into another huge market with the $23 million acquisition of South American mail order/contract company Officenet, with its operations in Argentina and Brazil.

Staples’ burgeoning empire now covers markets in Asia, South America, North America and 16 countries in Europe. CEO Ron Sargent clearly has a number of different stamps in his passport but he is anything but an accidental tourist, and has been thumbing his Officenet and South America brochures for some time now. He has bought the t-shirt and now he has bought the company as well.

Relationships

In fact, Sargent has had his beady eyes on Officenet right from the beginning. Officenet co-founder and CEO Santiago Bilinkis explains: "I have a long-standing relationship with Ron Sargent that started almost when Officenet first started.

"One of my personal interests as my company grew was to establish personal relationships with the relevant people in the industry. And Ron was kind enough to receive me several times and to be very open with us. He also gave us the opportunity to learn from Staples.

"We regularly told him about our plans and kept him informed on how they went. We repeated this kind of tradition every year and started developing a relationship of trust. We were being very open, saying what our plans were and sharing the results so, after five or six years, Staples basically knew that we were a company that set ambitious goals and reached them."

Investment

From the outset, Bilinkis has always been aware that, for Officenet to grow, outside investment would be needed. Four years ago, it raised $34 million from a group of financial investors including BancBoston Capital and CRI America-BSCH (Banco Santander Central Hispano).

"We knew we had to bring in international investors which we did with private equity funds," says Bilinkis. "But we also realised that, to fulfil the potential of this business, at some point of time we would need to become part of Staples. So it was in our heads from day one, and this will clearly allow Officenet to fulfil its potential."

Don’t expect too much to change in the near future though. Officenet may now be in a position to grow at an even more rapid rate, but there are no immediate plans to move away from its existing model or strategy. As they say – if it ain’t broke, don’t fix it.

And while Staples is the new owner, the company will continue to trade under the more recognisable Officenet brand, as it builds a foundation for the Staples brand. It will also continue to focus its efforts on the two largest South American markets – Argentina and Brazil. "There are other markets with potential," says Bilinkis, "but there are no concrete plans right now."

And adding a retail presence to its existing delivery business is not on the agenda either at the moment, although it does seem to be a case of never say never. "We are much better placed to do retail in the future with Staples than without Staples," says Bilinkis coyly, "but again, we will continue to stick to what we do best for the time being."

Commitment

Staples might not be the first power player to visit South America, but it confidently intends on being the most successful. In the past, both Office Depot and OfficeMax have dipped their toes, but are not around today to tell the story. So why will Staples fare better?

"You will have to ask Depot or ‘Max themselves why they failed, but from what I know, neither of them showed the kind of commitment to the region that Staples has," says Bilinkis. "They both had minority partnerships with other financial investors, while Staples has partnered with Officenet and has full ownership. It is not here just to test the waters and to see how it looks.

"In countries like Argentina and Brazil you need deep knowledge of local markets and business practices, and that’s what Officenet brings to the table. We will leverage the local knowledge."

While Office Depot and OfficeMax’s stay in South America turned out to be more of a holiday disaster, Staples has set up a home and is clearly there to stay.