When it posted a double-digit percentage increase in first quarter 2016 sales, OfficeSupply.com marked its ninth quarter of growth out of the last ten, vice president of merchandising Joe Schaefer says.
The company’s double-digit sales growth in 2015 over 2014 included an increase of more than 60% from new categories that go beyond the company’s traditional selection of office supplies, he adds. The privately held company doesn’t release financial numbers. “Traditional office supplies have been steady but where we’ve seen the most growth are things like janitorial equipment and safety gear that are relatively new to the site,” Schaefer says.
The web-only supplier of office supplies, furniture, cleaning and workplace safety materials is ranked No. 170 in the B2B E-Commerce 300 with an estimated $27 million in business-to-business sales and $45 million in total sales. But despite OfficeSupply.com holding a solid place in the market, it’s dogged by the same question that hangs over most if not all e-commerce organizations: “What about Amazon?”
The Jeff Bezos-led behemoth competes in an ever-growing range of product categories, including office supplies, but OfficeSupply.com has invested in better inventory management and fulfilling customer orders to remain strong despite Amazon.com Inc.’s shadow, Schaefer says. The improvements enable OfficeSupply, as it receives customer orders, to instantly refresh information on available inventory across its own warehouse and the warehouses of multiple third-party distributors that also hold and ship its products.
“We saw an opportunity to streamline our fulfillment process using our own warehouse and third-party distributors,” he says. “Our internal system is able to update in real time and adjust how an order will be fulfilled based on available inventory, and selecting the most efficient distribution center from which to fulfill orders.” Schaefer also says his company has invested well over $1 million in the fulfillment system, which was built in-house. By selecting the most effective shipping method, OfficeSupply cuts its costs while ensuring next-day delivery, an essential means of competing against Amazon, he adds.
Aside from Amazon, Schaefer doesn’t appear to be worried about other industry competition, including the proposed merger between office supply giants Office Depot Inc. and Staples Inc. The merger is still tied up in court due to government antitrust concerns, and a decision is expected in early May.
Schaefer asserts that, regardless of its competition, OfficeSupply will be able to compete on price because of its efficient operations. “I see it as an opportunity for us; you’re removing one big player from the pool and not all of those buyers will migrate with them. We’re more than cost competitive as we come in at an average of 20% under the competition’s prices.”
“The reality is that we run very efficient,” he says. Without any outside funding from venture capital or private equity firms, OfficeSupply measures the cost of everything it does. ”We don’t have room for waste,” Schaefer says. “Unlike other retailers, we also don’t have the same real estate costs or expensive sponsorships that draw from the profit of the business. The majority of our time is spent hypothesizing and then testing.”
The company is so confident in its ability to compete on price that it often advertises competitors’ prices alongside its own on OfficeSupply.com. “I have a comparison on a 12-pack of Acco binder clips,” Schaefer offers as an example. “Our price right now is 49 cents, on sale. Normally we charge one dollar for this item. On Amazon, that same item is being sold for $4.78, which is a whopping 79% discount on our site even when our price is one dollar,” Schaefer says.
OfficeSupply, which provides free shipping on orders valued at $45 or more, offers next-day delivery for no additional charge, as part of its standard shipping practice. Schaefer says he hopes this is a more appealing option to buyers than Amazon Prime, which charges a $99 annual membership fee. For its next-day delivery service, OfficeSupply boasts a 95% satisfaction rating from customers who post ratings on the service on its site, he notes. As for Amazon’s Prime Now program, which promises delivery within two hours, Schaefer says he’s content to cede that level of service to Amazon. “We’re not all that interested in that especially in our industry, where you don’t necessarily need the things you order that quickly.”
12-packs of Acco Small Binder Clips as they appear on Amazon.com (top) and OfficeSupply.com:
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