Boise e-commerce manager Andy Burford can sum up the big issue for companies in the office supply business in a sentence. "Office products are not a particularly sexy purchase order," he says. "But more to the point, compared to other supply categories our average order values are distinctly low - so it's inevitable that we'd want to apply efficiency to the process."

And they have. Along with Corporate Express and Office Products Depot, Boise (under its former brand names Blue Star, Hollands and Whitcoulls Stationery) established an online sales presence in the late nineties.

Burford says today online sales account for about 15 percent of Boise's business - still a long way from being the dominant channel but growing rapidly he says.

Unlike Boise however, Corporate Express has no brick and mortar retail presence at all, and not surprisingly, online sales have almost exceeded other routes as the companies dominant channel to market. "It's taken off," says general manager Brian Rosenberg, "to the extent that last year we had over 40 percent trading electronically and in some locations like Auckland and Wellington, it's over 50 percent."

At Office Products Depot, chief executive Kevin Mulcahy says his company has recently relaunched their web site and he notes that although Office Products Depot does have 40 retail stores nationally, the walk up trade has never been significant. "We have a very low percentage of people coming in," he says. "Our shops tend to be showrooms and warehouses. In our market our customers are people working in offices and it's very easy for them to sit at their desks and order. Over 80 percent of our business has been done direct - and still is today."

Interestingly, although Boise, Corporate Express and Office Products Depot are all essentially in the same business, they all chose different methods to take their business online. Boise, for example, uses the former Blue Star system with a new 'skin' and the e-procurement solution from Wickliffe, which seamlessly integrate. Corporate Express, on the other hand, have maintained an in-house (in Sydney) IT infrastructure for their website development, almost from day one. "This way we're masters of our own destiny," says Rosenberg. "We're not paying for functionality that we don't require - and we're not having to work around where functionality is inadequate."

Mulcahy says Office Products Depot looked at all the options and decided adapting an off-the-shelf solution from Conduit was right for their business. "For a full customisation job [building from scratch] there were two elements," he says. "Firstly it was very high risk, because you had to think of everything you wanted on the site, and secondly, every time we got a quote on that type of system, it was very costly and I felt that the risk and expense weren't worth it. They [potential developers] couldn't give you a firm price until they'd done a scoping exercise and that was going to be expensive in its own right. Whereas with the packaged solution they largely knew what it could offer and we only had to modify it to suit our business."

All three businesses are working at the corporate end of the market - supplying hospitals, law firms, government departments and the like, and from a supplier relations point of view, it's a tough business to be in.

Every two years on average, New Zealand's medium and larger organisations issue tender requests for their office supplies and stationary requirements and today more so than ever, the difference between getting the nod or not comes down to how cost effectively customers can deal with their suppliers. Non web-enabled companies wouldn't even be in the bidding says Rosenberg. "I don't see how you could work in the commercial environment without it," he says. "It's become a standard request from clients."

Ah yes - the clients. So what exactly is in it for them? All three men agree that there's nothing like the Internet for enhancing client service. Burford suggests client 'self' service might be a better term. He notes that while Boise are experts at extracting efficiency from the office supply process, their customers aren't. "For the customer," he says, "their 'reason for being' is not about delivering or receiving office products. They might be a hospital or a building company - so the more efficient we can make the process for them, the better for their core business."

And it is in the area of helping clients better manage their businesses that the office supply companies see their strategic advantages - and their opportunities for growing market share. Certainly any website updates and relaunches in recent months have been keenly focused on providing more tools for clients. "The benefit to customers with our new site," says Mulcahy, "is that they can customise a catalogue. Currently our existing catalogue has 3500 stock keeping units (SKUs). But people can now say 'well this is the type of pen we want and this is the type of pad we want' and they can bring the SKUs down to maybe 100 or 150. So instead of having every staff member signing into the 3500 SKU catalogue, they're only shown the items within their range - which obviously increases their buying power."

Corporate Express are also all about customisation. "E-commerce becomes a significant component of the value add that we bring," says Rosenberg. "We tailor the catalogue to suit the customers requirement and access to that particular catalogue is controlled - so it improves compliance to the range of products."

A big drop in keying errors, client specific pricing and a reduction in processing costs, are all part of the value equation, but curiously, all three suppliers point out an advantage of electronic ordering that none of them had expected. Consolidation. "Without doubt that would be the single, and probably the most compelling unplanned deliverable and benefit of all this online activity," says Burford. "Customers are placing fewer, larger, purchase orders. Where they used to place 1000 orders a year, now they might place 700 - for the same total quantity or value of goods."

At Corporate Express and Office Products Depot Rosenberg and Mulcahy have observed the same phenomenon. "It [buying online] allows them to accumulate orders over any period," says Rosenberg, "increasing order values and decreasing the number of transactions that would typically be processed."

Burford says the decrease in processing costs is good for both supplier and customer. "When you consider the high cost of managing transactions," he says, "if you can reduce the instances of those costs by 30, 40 or 50 percent - then it becomes a really worthwhile objective. And we're consistently seeing that happen now. The best thing about it is we haven't engineered the site to direct people to do that - it seems to be just a fortunate consequence of the shopping basket technology."

April 2003

By David McNickel