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Staples secures a Web site
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November 17, 1998: 12:02 p.m. ET
Office products retailer launches Staples.com, Yahoo! ad promotion
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NEW YORK (CNNfn) - Playing digital catch-up with its rivals, office products retailer Staples Inc. has launched an Internet store that it hopes to build into the leading business stockpiler in cyberspace.
Staples, a $5 billion retailer with about 800 stores under the Staples and Staples Express names, said it launched the site, Staples.com, to tap a burgeoning market for Web-based office supply sales that some analysts estimate at $100 million over the past 12 months and growing fast.
"The name of the e-commerce game is driving traffic and building brand loyalty," Jeff Levitan, Staples' senior vice president of strategic planning and business development, said in a statement Tuesday.
The Westborough, Mass.-based retailer also unveiled an advertising and promotion agreement with Yahoo!, the world's leading Internet portal service.
Under the alliance, Staples said it had bought banner advertising space on the Yahoo! network that displays the Staples name when Web browsers perform keyword searches for office-related items or ask to see small business sites.
Staples did not disclose the value of the deal.
Staples' gambit onto the Web comes at a time when rival superstores Office Depot and Office Max and a host of other office suppliers are already feverishly at work angling for a chunk of the online retail market.
But with Internet sales still accounting for a relatively paltry 0.2 percent of the $3.5 trillion retail market in the United States, analysts say the battle for market share in cyberspace is just beginning.
L. Keith Mullins, an analyst with Salomon Smith Barney, said that at this early point, the major office superstores are still constricted by their ability to deliver quickly and efficiently all the products they stock in their physical stores on a global scale.
Staples' site offers more than 6,000 items for next-day delivery in most U.S. markets and free delivery for any orders over $50.
But it remains to be seen how the stores will handle an expected deluge of orders as Internet sales mushroom and the customer base becomes more international in the next several years.
"What's the worldwide ability to handle the distribution of this product once they make the sale?" Mullins asked. That will be crucial, he said, to grow the Internet business, given the fact that most of the big web retailers already have the "back-end" logistics in place and a recognizable brand name to run a Web site.
Among its features, the Staples site allows Web customers to set up personalized shopping lists that save clients the hassle of having to create a new "to buy" list every time they visit the site.
A self-activated e-mail reminder alerts customers when supplies of a certain product may be dwindling, while a "Favorite Aisles" feature enables the surfer to leapfrog directly to a preferred item category from a home page.
Aside from office supplies, Staples sells furniture, computers and printing and photocopying services at its stores in the U.S. and Canada.
Last year, the Federal Trade Commission, citing antitrust concerns, blocked the company's proposed deal to acquire its larger rival Office Depot. Staples has instead pursued its acquisition ambitions by buying the privately-held Quill Corp., a direct-sales office supplier.
Shares of Staples were up 1 at 35-3/8 on the New York Stock Exchange Tuesday morning, while Yahoo! (YHOO) stock had eased 3-1/8 to 170-1/8.
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