Office Depot’s E-Commerce Evolution

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Table of Contents

Office depot operating environment
Office Depot’s Changing Environment
Organizational changes
Re-engineering the business process
Conclusion
Reference List
Footnotes

Office depot operating environment

Office depot deals with sales of office furniture, computers and their software. It also gives services such as printing photocopying, mailing services and reproduction of documents. Customers of office depot range from small business enterprises to individuals not disregarding large business establishments¹.

It accomplishes its sale via more than 1000 established office stores, direct mails, B2B e-commerce, through forces of sales and internet sites. “Office depot operates under Deport® the office place®, Viking office products®, Viking direct®, and for 4sure.com brand names” (Lee 2006, 143).

It started in Florida with its first branch located in Fort Lauderdale in 1986². Later years since then saw it expand even into the international markets like Israel, Columbia and Canada. It also merged with other market stationary leaders like “Wilson stationary and printing company and Eastman office Products Corporation with a consequence of their acquisition in 1994.

The growth was later escalated by merging of office deport with Viking conferring it with tag of leading provider in products and services for offices after staples. The operating environment for office depot is characterized by competition in market share, product lines and technological deployment in execution of the business activities and managerial organization.

Office Depot’s Changing Environment

The incredible growth of office depot demanded ardent changes in the manner in which it handled its business matters. As result in 1998, “office deport began to leverage e-commerce aggressively, launching the first of number of new websites, www.officedepot.com” (Lee 2006, 143). Furthermore, in 1999 it opened its very first United Kingdom e-commerce site in Europe: www.viking-direct.co.uk³.

This accomplishment saw it expand both the magnitude and range of products offered to the customers. The step-down of David Fuente as the CEO in 2000 welcomed attempts to make office depot a subtle shopping, investing and working place under the captainship of Nelson as the new CEO⁴.

The new CEO facilitated incorporation of new mechanisms to increase the depots retail and international market share. One of such attempts was to deploy e-commerce marketing strategies immensely. The changes to shift from the conventional marketing strategies, were no choice for office depot since its competitors both small sized and large sized had already adopted the e-commerce techniques.

The technique provided their customers with modest of shopping under one stop for various range of products. The changes sort by the office depot were thus driven by the intension to keep at pace with competitors since the competitors changes amicably threatened to erode off the office depot’s market share. E-commerce also “was rapidly shifting the balance of powers among competitive forces in the office supplies industry” (Lee 2006, 144).

Following the launch of e-commerce by one of the office depot’s competitor: office max, in 1995, office depot felt that it was being left behind in the adoption of e- commerce, something that was expected to in a blast alter the traditional marketing strategies especially the moment the customers becomes accustomed to online sales mythology.

Despite the fact that office depot had a better opportunity to thrive well in the office supplies market since it dealt with standardized products, entry of small sized business such as “Opivotal.com and buy online.com” (Lee 2006, 144) which relied on e-retailing technology, “ had entered or were planning to enter into office depot’s supplies market” (Lee 2006, p.12). A way out to counter the competitors attempts was warranting.

Office depot wanted to achieve the goal of fighting its competitors on its own after the 1997 failure of the proposed merger between it and staples because, if the merger proposal were passed, it would have become uncompetitive with repercussions of rising market prices⁵. The objective of merger was to cease out small competitors such as Wal-Mart and K-Mart.

Particularly office depot wanted to “make customers so satisfied with their online shopping experience that they would not bother looking elsewhere on the internet to save a few pennies (Lee 2006, 147). To achieve this goal the office depot contemplated employing B2B e- commerce and B2C e- commerce online trading technologies.

Berkman (2001) noted that office depot participated in an “experiment initiated by MIT in which a group of MIT’s suppliers would build website that MIT would make purchases from” (20). This involvement resulted to the evolution of office depot e-commerce. The first strategy was to make an introduction of “B2B e-commerce for large corporate customers” (Berkman 2001, 145) followed by introducing B2C e-commerce to cater for small business and individual customers in 1997.

The selection criteria were based on the possibility of “reduction in cost of labor due to streamlined internal process and improvement of information system integration” (Lee 2006, 145). The task was not all that simple and required expertise knowhow and therefore a committee that worked closely with analysts of the industry was born.

In as much B2B e-commerce was an opportunity that office depot could not have afforded to let loose, on the other hand the committee saw the relevance of B2C e-commerce. Lee (1998) notes that “the committee believed that the benefits of B2C e- commerce could be both strategic and operational: low order processing costs, brand recognition, business efficient and foster economies of scale” (p.146).

As result, January 1998, saw office depot launch B2C e- commerce, which according to Bill Seltzer had incredible room for development due to the office depot’s possession of infrastructure and cute distribution networks. To avoid replication of the challenge encountered by predecessor in the deployment of e- commerce, office depot sorted to benchmarking its operational platform to come up with an optimal platform that offsets the challenges of its competitor’s organizational infrastructure.

Organizational changes

Adequate evidence unveiled that settling on misguided e-commerce organizational structure had unbearable consequences of revisions as portrayed by K-Mart’s spin-off structure and Wal-Mart’s attempts to establish an “integration of the physical store and the e-commerce entities” (Boyler and Olson 2002, 489).

In the light of the need to keep off the expressive e–commerce organizational structures and its associated protocols, office depot deserved to make a change from the traditional approaches in the technology’s platform organization⁶. “Office deport created an online division that could leverage its internal resources to the largest extent⁷” (Lee 2006, 146) since according to Landau (2002) it “viewed e-commerce as a backbone of the company’s supply chain” (59).

The online division had the merit of allowing the company to celebrate advantages of the strategy such as making it easy to coordinate channels, technological resources sharing and an opportunity to exploit employment of assets deemed as complementary. This was particularly necessary considering the company’s extensive market coverage and the numerous products it handled.

Re-engineering the business process

Amongst the goals of office depot in 2001 was to search for mechanisms for expansion of e-commerce business. Bruce Nelson considered “investments in emerging e-commerce technologies, strategic partnerships, and business process re-engineering” (Carr 2001, para.8) as some strategies that were coherent with the company’s technological strategies, which could help it, realize the 2001 noble goal.

On the other hand, Bill Selzer, considered re engineering as the company’s website as the way out to solve the problems engulfing the company in 2001. There was need to fast track changes in the company’s vast store, invoices, outstanding bills and ever-increasing volumes of transactions among others.

Re engineering the downstream chain of supplies was challenging since, “ the purchase orders received from corporate customers differed in format, requiring complicated transformations and manual intervention to convert every purchase order into formats compatible with office depot’s internal system” (Lee 2006, 147). The outcomes were amicable with a significant reduction in the transaction times, hence quickening data organization and delivery at incredibly lower costs.

Conclusion

Office depot depicts a company that strives to survive in an environment dominated by stiff competition. Its strategies of survival includes; merging, change and adoption of new technologies such e-commerce. It also embraces strategic alliances and re-engineering of technology, which has already been incorporated in their business as attempts to make it more competitive⁸.

The benchmarking strategy was particularly great since it saw the company come up with a better methodology to handle it challenges and hence overcome tests of times gone through by its competitors who used a different approach. Office depot could have improved its costs reduction strategies.

One way to do this is reducing the vast number of products they handle in their sores by concentrating on the products that have high turnover and those that move fast. Consequently, substantial saving on space requirements could be achieved. The move could also help in reducing the number of traffic flowing into their e-commerce system and hence relieving the company substantially the cost of re-engineering.

Reference List

Berkman, Edward T. Clicklayer. CIO Magazine 3 (2001): 92-100.

Boyler, Keith K., & Olson, Jim R. “Drivers of the internet purchasing success.” Production and Operations Management 11.4 (2002): 480-498.

Carr, David F. Case 007: office Depot-Making Liquid Code. Accessed from http//www.baselinemag.com

Landau, Michael D. “Sweet revenge.” Chief Executive 178 (2002): 58-62

Lee, Insten H. Cases on Electronic Commerce. Office depot’s E-Commerce evolution 2 (2006): 142-150.

Footnotes

¹ It is an all-round body that accommodates all classes of business people, both large and small

² Since 1986, the office depot has grown significantly based on the changes that have taken place in the management, skilled man-power as well as the onset of technology

³ This qualifies as the implementation which contributed the most concerning the growth of the office depot

⁴ The removal of the former CEO, though highly resisted, marked the dawn of a new era in the world of the office depot

⁵ The issue of merger has been proposed by many governments as well as organizations as a solution to the many problems they experience. However, they seem to know little concerning the repercussions that come as a result for instance influencing competition negatively as the case stands in the office depot

⁶ The change of the office depot from a traditional based to a technological oriented organization explains the evident radical shift in its performance

⁷ Its mode of operation, structure and any other relevant information concerning the office depot was made available over the internet hence increasing its fame as well as popularity via this online strategy

⁸ Businesses that have tapped the vast inventions brought about by technology perform better compared to those that rely on the traditional methods for their operation. Office depot is technology oriented and hence the evident recommendable performance

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