Source: Instacart
Is same-day delivery a sign of better things to come for Staples?
Only a few months ago, Amazon.com was the primary shopping destination for office supplies — as it was for many products purchased primarily online. Fulfillment delays on Amazon’s part and emerging consumer trends tied to pandemic-era living, however, may have provided an opening for flagging brick-and-mortar chains like Staples. With a new same-day delivery relationship with Instacart, Staples may be able to capitalize on favorable trends forged early in the novel coronavirus pandemic.
As stores nationwide begin to reopen, Staples is beginning to offer same-day delivery through from more than 1,000 of its store locations. The Instacart partnership is meant to meet the needs of reopening small business customers, teachers and others while allowing them to continue socially distancing practices.
The move comes as concerns remain about the risk of contracting or spreading COVID-19 by shopping in stores. At the same time, customers are experiencing an increased need to get office supplies quickly.
Since the onset of the novel coronavirus pandemic, more people than ever before in the U.S. have found themselves working from home and, consequently, have an increased need for essential office supplies. With students being homeschooled and with the possibility remaining that schools will not reopen in the fall, supplies have likewise become essential for many.
Other areas of non-grocery retail have also experienced unexpected increases due to the pandemic. For instance, the need for home technology capable of facilitating working and teaching from home led to increased business at device retailers like Best Buy.
Before the pandemic, Staples was already working on a reinvention that would cater to the needs of the growing work-from-home set. Early in pre-pandemic 2020, Staples launched a new concept store called Connect meant to bring in small business owners with offerings like a podcast studio and a coworking space. Remaining big box competitor Office Depot likewise rolled out a small business-targeted concept.
Discussion Questions
DISCUSSION QUESTIONS: Will Staples’ partnership with Instacart make it more successful with consumers of office and school supplies? How else might Staples take advantage of new shopping habits in the flagging brick-and-mortar office supply space?
Poll
BrainTrust
Dave Bruno
Director, Retail Market Insights, Aptos
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
As Tony Soprano used to say, “fahgedaboudit.” The fees for third-party delivery are really prohibitive, as everyone else is finding out — sooner or later you have to do it yourself, and Staples just doesn’t have the wherewithal to do that. One hundred-store company? Soon enough.
Yes, I feel there is a window of opportunity for Staples … presuming they can effectively engineer the supply chain, manage their pricing competitively, deliver on time, and add one more VERY important element — service. Imagine a Staples “Geek-type” squad that helps set up home offices and then offers customers subscriptions to keep them fully stocked with supplies. Now that is a vision I would support. (As my late father often said, “If you think that is good, I have ideas I haven’t even thought of yet!”)
I definitely like the same-day delivery, as well as the small business support. It’s been overdue. I always thought Staples (and Office Depot/OfficeMax) had an opportunity to provide small working spaces and foster local community, before WeWork came into vogue. Or they could just as effectively be an Airbnb of meeting rooms. It is such a waste of real estate having aisles of printing paper.
There is definitely a legitimate opportunity for Staples to capitalize on Amazon’s recent shortcomings. Amazon is still struggling to fulfill orders in a timely manner, and I continue to see many instances of overpriced items (sometimes even bordering on gouging). I believe people will welcome a timely, fairly-priced and reliable alternative to Amazon, and Staples is well-positioned to be that alternative. However, beware the issues lurking at Instacart. My personal experience tells me they are struggling to keep pace with the recent spikes in demand, and they are not properly training nor supervising all the new shoppers they have hired. Pretty much every order we have placed through Instacart lately has been delayed and has included multiple errors. I would suggest that Staples implement very strong quality control and oversight measures to ensure the experience indeed represents a positive alternative to Amazon.
There is a place for same-day delivery in the office supply sector. Not all customers that order from Staples need whatever they order on the same day, which means that Staples might not have to spend “prohibitive” amounts of money on the service and will be able to fill that need. The result will be that Staples will be able to compete with Amazon on some level. But then, I have been a Staples fan since the early ’90s…
What the COVID-19 situation gave me an opportunity to do was to try various third-party delivery options by different retailers. Without a doubt Instacart was the worst in terms of performance, to the point that if that was the option the retailer offered, I would not purchase from that retailer.
For many years I used Staples for all office supplies and was very, very satisfied with the delivery service. They offered “next-day” and even pickup for returns. But I moved to Amazon. Why? It was just easier. One less place to go to and the process was not really different.
As for the future of Staples — they need a complete change in their business model. What can Staples offer that Amazon cannot and that is meaningful? Suresh and Dave threw out a couple of good ideas.
Staples had to make a move, as Amazon is hungry for the lucrative business market.
Instacart is a trusted e-commerce partner and this collaboration modernizes Staples’ strategy. Since most office products are easy to ship, e-commerce is a good fit for this category.
To differentiate from Amazon, Staples could use its stores for fast micro-fulfillment. It can also promote local businesses and entrepreneurial and educational resources to cultivate a sense of community, which could spur loyalty.
If people aren’t going to offices — then what’s the market for office supplies? Home offices need such small quantities of this stuff, a two-hour delivery model for small orders can’t make much sense.
Amazon set the bar high and now competitors (like Staples) are stepping up to meet the challenge. It takes innovation and an understanding of distribution to make same-day shipping work. Instacart may be the perfect partner.
The goal of same-day delivery for Staples (and any company for that matter is lofty). Many companies in specific industries (automotive and healthcare) do it today but these are also considered essential verticals; where time matters. If you can compete on time (same-day delivery) and do it profitability by building it into your cost to serve operating models than do it. Note Staples also has a significant last-mile delivery fleet. I am assuming the partnership with Instacart is a function of expanding capacity and in-store fulfillment and not about profitability. Staples will have to make a build-or-buy decision and run the economics. Short term it’s a great move to take market share from Amazon who is failing to meet the needs of customer demand. Mid to long term they will need to evaluate if they in-source or out-source and how they optimize last-mile delivery.
What? Why is this news? Staples’ sister company, Essendant, has a big warehouse full of office supplies in every major market in the country (as does its competitor, SP Richards). Both the big-box office supply stores (including non-store operations like WB Mason) and local office supply merchants use ESS and SPR for daily fulfillment to their contract customers and increasingly to small and home business accounts. We were “literally” doing same-day fulfillment back in the 1980s with this model when I was working at St. Paul Book & Stationery. And today, WB Mason is basically loading a micro-warehouse into their iconic delivery vans today for near-instant delivery in key markets.
Always good to have choices. By offering same day with Instacart it gains mindshare with the home office crowd who wants it now and is willing to pay the premium, but also puts it into consideration if the customer goes on the web site, looks at the markup and says “you know, it can wait” and buy it using normal delivery methods.
Staples has long been challenged by the nature of its business: low margin commodities that depend upon volume for profit. Once deep-pocket online sellers (hello, Amazon!) came along, the job got harder, since it was no longer a level playing field. And now, more people working from home is likely to make things harder still, since we still have the same deep-pockets competition, but without the volume buying one sees with an office. So I hesitate to use the word “successful.” Making the best of a flagging situation is more like it.
Since my time with Staples, there has been an enormous amount of change, upheaval and refocus for the company. Instacart in this case would be strictly a stepping stone to where they need to be, operating their own same day delivery capabilities. More important this will be somewhere Staples will need to expand their B2B capabilities across their SMB customer base more than residential, which isn’t quite where Instacart plays. This is a good step for a typically non-essential retailer to get back in the game, but will need to be a strong play and have something more substantial to follow it up as we (eventually) go into recovery mode.
Lots to think about here. Can Staples remain relevant into the future or is it too late for office supply stores? This kind of reminds me of when grocery stores lost paper products to mass merchandisers. Once it is gone, hard to get it back. But trying something like this might make sense given the choices Amazon made during the pandemic. Same-day delivery can certainly be an easy solution for shoppers if the product is really needed immediately (question is, how much is needed now versus waiting another day or so). And then, how does the “office” of the next normal look and what does that mean for office supplies in terms of quantities and procurement?