Staples' new strategy is targeting your SMB customer base-and winning!
Make no mistake, this is land grab. SMB customers are the battleground. Staples is preparing itself for a post-retail world. Over the past several months they have been hiring twenty-something college grads with one goal: go out into businesses with between 10 and 200 employees and get them set up to buy products online. The product focus is to get them to buy office technology, but at the same time leverage the Staples strength of an “infinite aisle” and product lines that extend to cleaning and breakroom, furniture, and even power tools. You need to fight back.
Staples Advantage Program: Quick Facts:
- 46% of Staples revenue comes from Staples.com
- Advantage membership grew by 34,000 customers to 91,000 in this quarter
- Retail sales fell by 8.1%; office supplies (including paper, ink, and toner) fell by 1%
- Technology sales (printers, computers, etc) grew by “double digits”
- Customers pay an annual membership fee of between $79 and $299
What’s different about this?
We don’t get to sit in the strategy meetings at Staples, but it’s pretty clear they are “sunsetting” their traditional retail store model. An 8.1% annual decline is not sustainable. This model is a direct answer to Amazon Primeand Amazon business. Staples has upped the ante though, and they are targeting Amazon’s weakness; not having “feet on the street” in local markets. The basic retail model of sales is to get people into a store to buy basic products (STAPLES!!) then sell them higher margin, impulse buy add-ons. The new logic shows that e-commerce does a better job upselling and cross-selling than sales reps or stores do. Product recommendations are responsible for an average of 10-30% of e-commerce site revenues according to Forrester Research analyst Sucharita Mulpuru. Staples will not stop there. Once the pipeline is opened, they will move more and more products through it.
What stops most BTA dealers from successfully broadening their product offering?
Great question (thanks…). I’m lucky enough to speak to dozens of technology resellers like BTA dealers and VARs every month. The biggest issue I see is that there is a misunderstanding as to what e-commerce is, and how it could fit into the workflow of businesses. Most owners are salespeople. They believe their businesses are successful because “people buy from people.” It then follows that if they replace salespeople with e-commerce then they lose that personal touch, and the company will struggle. This is the misunderstanding:
This is what Staples is betting its future on. The combination of feet on the street salespeople and fantastic logistics with an e-commerce platform will make their business soar. The difference is that Staples recognized their weakness (no small business outside account managers) and addressed it.
Technology Dealerships already have some key advantages:
- GREAT salespeople
- Subject matter expertise
- Access to technology products
- Long-standing customer relationships
- A strong local brand
Is it time to address your weakness? …yes, I’m talking about your website.