Office supplies retailers collectively grew online sales a meager 1.8% in 2017—the lowest rate for all 15 product categories tracked by Internet Retailer. But lagging e-commerce sales from giants like Staples Inc. and Office Depot Inc. are leaving the landscape looking grimmer than the performance of smaller non-chains alone might suggest.
Web sales gains for the 33 devoted office supplies merchants ranked in the Internet Retailer 2018 Top 1000 were substantially lower than the growth rate for the U.S. e-commerce market as a whole, which was 15.6% last year. Comparatively, the overall Top 1000 received a robust 18.5% boost in online revenue for 2017. Even the second-slowest-growing category in the ranks—flowers and gifts—saw e-commerce increase 6.5%, which is more than three-and-a-half times faster than the growth of office supplies retailers.
Office supplies sales for non-chains increase 16.7% year over year
Yet together, Staples’ and Office Depot’s web sales represented north of 70% of all office supplies sales for Top 1000 retailers, so their performance had a disproportionate effect on the rest of the category. Staples (No. 5), suffering from the reduced demand for paper and other workplace materials in the digital age, had its third-consecutive annual e-commerce decline last year with an Internet Retailer-estimated 5.3% drop in online revenue. And digital growth for Office Depot (No. 14) remained flat at less than 1%.
So, once those heavyweights are excluded, the remaining office supplies players collectively posted a 16.7% bump in e-commerce. That’s noteworthy given that total retail revenue in this category has been steadily shrinking since 2008, according to data released by the U.S. Commerce Department. Declines in total sales for office supplies have hovered right around 7% for the last several years.
When retail chains are factored out, all other office supply merchant types saw double-digit growth in collective online sales last year. In fact, four of the top five leaders in 2017 e-commerce growth were web-only retailers—a merchant type that saw saw nearly 20% overall growth. And the other leader, Poppin (No. 551), is a web-driven consumer brand manufacturer that opened its fourth showroom in Boston in October as it increases efforts to showcase the office furniture line it introduced in 2015.
Another bright spot: The handful of Top 1000 merchants that sell pens and desk supplies saw 43.4% growth last year—more than double all other office supplies subcategories.
Amazon continues to encroach
Although the category snapshot doesn’t take into account office supplies sales through retailers that don’t solely sell those products, it’s worth considering the impact of at least one mass merchant.
According to online retail analytics firm One Click Retail, Amazon.com Inc. (No. 1) had nearly $3 billion in office supplies sales in 2017, and the segment is growing at a 30%-plus clip. Although the marketplace isn’t a devoted office supplies retailer, this would place it among the top three leaders in the category. Amazon performed well in printers and office organizational items (file folders, binders, labelers, etc.), and its AmazonBasics private-label products accounted for eight of the 10 bestselling shredders on the site.
With Amazon increasingly making inroads in the category, much of the conversation about how to compete with the behemoth has centered around catering to a niche audience in a way that the mass merchant isn’t wired to do. In that vein, the office center subcategory, which sells the least-specialized range of products, was the only group to see a decline last year. Yet some office supplies retailers are finding success by going another route: expanding product lines.
Diversifying inventory: Office supplies aren’t just for cubicles
OfficeSupply.com (No. 554) grew roughly 20% in 2017 and is on pace for a 15% increase in online sales this year, says Joe Schaefer, senior vice president of e-commerce. He attributes much of that success to redefining the word “office” and offering supplies in a variety of sectors.
“What we realized a few years ago is that there was this stereotype of what an office is—essentially equating it with a cubicle that needs paper, pens and tape,” Schaefer says.“But there’s the teacher who’s in the classroom who needs furniture. The lineman who’s out in the field working on electrical lines who needs high-visibility safety vests. The facility manager—their office could be the restroom. Meeting rooms, warehouses—it could be a variety of places.”
So, the office supplies retailer has increased its product assortment over the years to supply employees with anything they might need to do their respective jobs. Inventory includes janitorial products, craft supplies and break-room stock such as coffee, paper plates and napkins. All three subcategories are outpacing the growth in more conventional office product lines, Schaefer says.
“As an overall industry, it’s not doing great,” he says. “But there’s still a lot of opportunity for us.”