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On the outside LOOKING IN

There’s serious intent to delve deeper into the business supplies industry from a broad variety of resellers sitting somewhat on the periphery. They’ve been revealing some interesting strategies to OPI’s Michelle Sturman too...

The changing world of work has reinvigorated and ramped up interest in our industry from outsiders, including online marketplaces. It has also shone a spotlight on resellers that play by their own rules. OPI spoke to several of these operators to find out what makes them tick, the strategies for success and their thoughts on our sector.

Accelerated by lockdowns and the onset of remote, home and hybrid working, e-commerce has become an indispensable portal for end-users. It has modified behaviour, resulting in unique purchasing patterns, with people buying different products from different channels at different times.

THE COMPLETE PACKAGE

One company at the forefront of the digital evolution since 2000 is European B2B e-procurement platform Mercateo. Well-known in the office supplies world, it has undergone a recent rebranding, with Mercateo slowly transitioning to its new name Unite. Meanwhile, Unite – launched in 2017 and operating under the same broad umbrella – also comprises a B2B networking solution that directly connects suppliers with buyers.

Unite’s Head of International Supplier Management Steffen Hammerla believes the two operational sides cover all bases – from spot buying, volume purchasing and framework agreements using Mercateo, to creating robust relationships and the ability to negotiate on pricing and services on the Unite networking platform. “We support an entire infrastructure to handle all buying and selling options digitally and this is becoming increasingly crucial in today’s business world,” he adds.

Hammerla points out that while online marketplaces are used by customers in place of traditional resellers for tail spend, some categories still necessitate personal relationships. For this reason, Unite is focusing on strengthening its networking platform.

“Our goal is to make the network more productive in fostering active relationships. We measure connections, not revenue. The greater the connections, the stronger and increasingly relevant the network becomes. Unite comes full circle as companies involved on the networking platform use Mercateo for spot buying and vice versa,” he explains.

Hammerla believes it is no longer enough to simply deliver products from A to B – it’s about differentiation, additional customer benefits and product services. With sustainability, new office concepts and home offices playing an increasingly important role in our sector, ‘traditional’ suppliers

have a real opportunity to reinvent themselves – if they don't, they will be squeezed out by marketplaces. “Those that remain will need to figure out their core competencies, logistics, services and especially e-commerce,” he asserts.

Utilising an online marketplace may represent the way forward for many resellers, and one familiar name – though perhaps not strongly associated with the B2B space – is eBay. The company is keen to point out, however, that the platform has long evolved from the C2C “buy-and-sell-what-you-find-at-home” place to a modern marketplace with the majority of inventory sold by B2C sellers.

“The main reason brands and manufacturers may not currently be working with us is simply because they still hold this outdated image,” remarks Category Manager Business & Industrial Melina Ruck. “This might lead to eBay not being top of mind when thinking about how to enhance their online sales strategy.”

While the office supplies category has always existed on eBay, it was only in 2018 that the company started to focus more intensely on this segment. Says Head of Parts & Accessories and Business & Industrial Karin Weissenberger: “We invested in a team in Germany and believe there is lots of potential to be unlocked. It’s why we started participating in OPI conferences and reaching out to brands, manufacturers and dealers within the industry to collaborate and optimise what is offered to buyers on the platform.”

Elaborating further, she adds everyone benefits from eBay’s pure marketplace model, giving sellers the opportunity to make use of the operator’s reach and technology platform, and broaden their multichannel strategies.

Ruck, meanwhile, agrees with Hammerla’s assessment that there is no way of avoiding getting involved in e-commerce – especially online marketplaces – if a company wishes to be and stay successful in the long term.

IDENTIFYING SOLUTIONS

Independent dealers and resellers have been lauded for their product category expansion during the pandemic, encroaching on the territories of jan/ san, packaging, MRO and safety distributors, for instance. But the same has happened in reverse.

Large resellers from outside our industry are more than just dabbling in office products – Conrad Electronic and RS Components in Europe, and US-based Uline, Grainger, Imperial Dade and MSC Industrial spring to mind. It’s all about the single-source approach.

Take Conrad Electronic, which has a direct presence in 16 EU markets as well as in the UK. B2B constitutes most of its business and five years ago, the company launched a B2B-only marketplace. Talking about its move into our industry, Rado Svec, VP Platform at Conrad, says: “Over time, the needs of our customers expanded as many of them were looking for a one-stop-shop solution. As a result, we extended our category coverage into the office supplies segment.

“This has been boosted further by the launch of our marketplace in 2017, enabling us to increase our catalogue from roughly 800,000 SKUs to over seven million items. The office products category is now a sizable part of our business.”

According to Svec, a particular strength lies in ad hoc spend, servicing clients that buy across categories where Conrad’s broad product range offers a distinct advantage. “This is supported by our single creditor solution, relevant especially for big companies, with Conrad thus being the preferred party they transact with.

“All the while, users enjoy access to pretty much all the currently established transactional channels – from simple website shopping to integration into ERP purchasing systems, PunchOut solutions, private e-catalogues, etc. While customers are moving naturally to digital channels, they can equally use RFQs, email or telephone orders.”

RENEWED FOCUS

Industrial and electronic solutions provider RS Components has also only relatively recently dipped its toes into our industry. Over the years, the company has morphed from a traditional catalogue firm into a global omnichannel operator of product and service solutions.

Describing its go-to-market strategy, Christian Horn, SVP of Product & Supplier Management, says the focus is almost exclusively on B2B, combining a “very strong digital capability” with a 1,500-strong sales force concentrating on key and corporate clients.

“While our target customers are engineers, many are based in an office environment, so offering OP and facilities supplies represents a natural extension to consolidate their spend. 25% of our revenues come from categories outside the industrial space, and we have had a modest offering in the OP sector for some time.

“However,” he adds, “the recent shift in customer demands around work-from-home, hybrid working and the smart office has generated the need for a renewed focus on the range. So, while we aren’t necessarily a destination supplier for business products, significant growth in this space which complements our broad industrial offering has been noted.”

The intention, according to Horn, is to put RS on the map as a trusted and valued partner for OP for both customers and suppliers. The reseller offers a global footprint with over 700,000 products, strong brand equity and digital strength. On that latter note, 4% of revenues are also invested every year into digital capabilities and activities.

Large resellers from outside our industry are more than just dabbling in office products [...] It’s all about the single-source approach

On a smaller scale, Germany’s Schäfer Shop has also transitioned from a traditional mail order firm into an omnichannel and customer-centric market protagonist. “We retain a firm belief that understanding customers will be more successful in the long run than trying to push products or solutions into their shopping basket. As traditional business products resellers claim to be customer-focused, we differentiate by being customer-centric instead,” comments VP Operations Christian Langvad.

Explaining the ‘customer-centric’ approach, Langvad says talking about office supplies revolves around convenience and transactional ease; discussing industrial equipment requires a mandatory high level of technical expertise; if a customer is renewing a workspace, it’s about providing a full-service solution.

“In the past, there was a marked tendency among OP players to invest their efforts into trying to sell more paper, files or pens. Often, the answer was either attempts to compete on price or to acquire other market players. As this formula turned out to be less effective in achieving

For more comments from OPI’s reseller interviews, see our Xtra content in the June issue on opi.net

business goals, the next ‘big step’ was to extend product ranges into other sectors, hoping to gain share of wallet. Were these initiatives sufficient? I’m not sure.”

Forgoing the drop-shipping route is also a key differentiator, he says. Contrary to most other resellers, Schäfer Shop serves its customers with complicated and bulky orders such as furniture or industrial equipment from stock in its warehouse. And it does so largely with its own delivery trucks.

Notes Langvad: “The customer is served end-to-end without involving external resources. Our principle and focus are to deliver the best experience in the segments we supply, instead of trying to offer any product imaginable with varying levels of service quality.”

LEADING THE WAY

Horn believes that changes in buying behaviour and the many category headwinds the OP industry has faced have brought about a lot of consolidation – both among suppliers and resellers. But they have also led our space to always be at the forefront of business model innovation and “running a tight ship”, be that in terms of sales, pricing, distribution and warehouse management or in optimising working capital.

On the other hand, he acknowledges that the challenges around growth and profitability have made investments into capabilities in areas such as digital innovation or services more difficult.

Conrad’s Svec agrees in principle with Horn, seeing higher dynamism, openness to change and a willingness to transform compared to some other industries.

Moreover, he adds that plenty of manufacturers and brands are also reviewing their traditional distribution, in an effort to be closer to the end customer. “They are jumping on the digitisation train with verve and giving up on old dogmas. It is very encouraging.”

CRYSTAL BALL GAZING

OPI asked those interviewed for this article for their thoughts on how they see the business supplies landscape evolving over the next few years.

Christian Langvad, VP Operations, Schäfer Shop

We’ve probably never experienced so much substantial change in such a short period of time. The consequences of the pandemic and the tragic Ukraine war are complex, non-transparent and of a long-term nature. I guess companies are focusing on becoming more resilient and stable.

On the one hand, this is a wise move, but on the other, I am convinced these events will force many operators in the office supplies space to rethink vital parts of their business model.

Christian Horn, SVP of Product & Supplier Management, RS Components

The move away from traditional office working will continue to shift and shape demand, as will the ever-increasing relevance of technology in the workspace and the trend towards smart offices.

Karin Weissenberger, Head of Parts & Accessories and Business & Industrial, eBay

The office supplies industry is evolving and in the past few years, we’ve seen a shift from offline to online. It will be exciting to see what happens next and especially long-term in a post-pandemic world.

Rado Svec, VP Platform, Conrad Electronics

Digitalisation, e-commercialisation and channel disruptions – perhaps more positively labelled as the variation and expansion of traditional distribution models – will be even more palpable in the future. On the customer side, further supply consolidation, removing purchasing complexities and sustainability will continue to be big themes going forward.

Steffen Hammerla, Head of International Supplier Management, Unite

I think the key to future success is to be creative, especially for more traditional resellers of office products. It needs a good mix of repositioning the existing stationery business and a wide-ranging e-commerce strategy, with partners that support these resellers in creating the necessary distribution tools and selecting the appropriate distribution channels.