If you are an imaging technology dealer, then the Staples and Office Depot blocked merger is a HUGE WIN FOR YOU.
The Staples – Office Depot non merger may have slipped under your radar as a non-event, but I think it has the potential to be a significant turning point in your business. Their loss is your gain. This might take a bit to explain, but give me a minute and I will make it worthwhile. You stand a substantial chance of gaining a lot of local business if you can make an accurate prediction of why the merger failed, what the future is for of these both companies, for Amazon, and for your dealership.
You can read about the merger here. These two companies account for almost $30 billion in annual revenue but the fact that it was almost double that number at one point is a symptom of the problem: office supplies are a declining business. Heck, even before this merger, Office Depot and OfficeMax combined, or more appropriately, they collapsed into each other. When your leading product sales are ink, toner, paper, marking supplies, low end printers and laptops, and cheap office furniture, then the declining top line numbers are not surprising. Still, the judge presiding felt the combined companies could have held a near monopoly on large business office products. He felt that Amazon was close to becoming a viable competitor there, but that they were three years away. So again, why should you care?
Well, what is clear is that the local presence these chains enjoyed in the form of bricks and mortar is done. There will be mass store closings, especially for Office Depot. The only real future that these companies have is in their online stores, and their Large Enterprise divisions. Their local business – one that was built upon serving Small Medium Enterprises – is going away.
Take a minute to let this sink in. Stores will close. Probably your biggest competitor for the past three decades is going away. Over the years as you have tried to sell more reliable hardware than the low cost entry-level devices Staples and Office Depot sold, and they sold millions of units. As you tried to take over fleets of printers with managed services, they had great, reliable logistics and low cost ink and toner. All the while you wondered how they could do it. When the volume was there, they did it, but as volumes fell, so did their model.
So, how will you react to this “non-event?”
I think it would be a mistake to jump straight into the business of offering an ‘infinite aisle’ of office products. If these billion dollar babies couldn’t make that model work with their enormous buying power and economies of scale, it’s going to be hard for you to make it work. Many of their product lines are in decline, but you can certainly pick through the various categories and for some opportunities.
Here’s a quick plan:
- Pick technology products like laptops, connectivity, and mobility that compliment your existing imaging technology products.
- Get authorized by more OEMs. Think Samsung, HP, Apple, Lenovo. As the big guys lose their local stores, these brands will need a local sales and service company – that’s you. They may not even know it yet, but they could be in big trouble. Imagine the credit lines these brands have.
- Think about paper! I can’t believe I just said it, but companies still need office paper. If you can figure out the logistics of handling it as little as possible, it’s a category that goes hand in hand with your ink and toner.
- Get online. Of course my company, MPS Toolbox, builds e-commerce websites, but the difference is that I think websites need to combine with a local sales team. A local presence + an easy to navigate e-commerce store is a winning strategy. It’s also why the superstores will lose online business when their stores go away.
So, the demise of the office superstore is at hand. Okay, it may take a year or two to sort out, but it’s coming. Drop me a lineand we can discuss further. I’d love to hear your take.