[inmygarage]

These businesses are most certainly NOT "on their way out". Office supplies is one of the largest categories in ecommerce. Staples and Office Depot are each doing billions in annual sales online. The idea that Amazon has already won in this category is simply not true (yet, but still).

Staples did ~$10b in online sales last year and Office Depot did ~$6b. Online only.

Staples sells more online in pure dollars than Apple, Walmart or Dell.

This is not Radio Shack.

I think this is a really smart move for Staples.

Source: https://www.internetretailer.com/2013/05/24/big-and-getting-...

[onion2k]

Realistically the only way they can go is down. People just aren't even going to buying more of what they sell. The threat isn't Amazon, it's Apple. People are going to continue to use devices more and pens less right up until no one uses pens any more.

Also, bear in mind that you're quoting an article from 2013, and Staples stock fell by about 25% in 2014. They've picked up a little since then, but they're not going to get back to where they were. Their market is slowing disappearing.

[hnnewguy]

>People are going to continue to use devices more and pens less right up until no one uses pens any more.

And what prevents Staples from adjusting their product offerings to lean more towards "devices", and less towards "pens"?

Amazon used to sell only books....

[onion2k]

Nothing at all, but their past performance of selling pens is not an indicator of how well they sell devices, or if there'll even be a market for selling other manufacturers devices in the future. Staples are very good at repeat sales of core business stationary. That market is not going to exist for that much longer.

Maybe they'll move to a different market successfully, maybe they won't. They wouldn't be the first once successful company to fail as the market changes though.

[Retra]

I've been hearing that for decades, and while the latest round of technology is a step in that direction, it is not significant enough to overcome the advantages of existing office supplies. (Largely because nobody really knows what those advantages are in a way that can be outmaneuvered digitally.)

How long do you imagine 'that much longer' to be? That sounds too weaselly to be accurate.

[inmygarage]

Yes, I agree.

My point is that these business are a lot larger than people realize, and that the phase out is going to be a lot slower than people think because it's primarily enterprise recurring contracts that are powering their sales.

That said, I use the printer at my office maybe 1x/week, so I agree that it's not long-term sustainable. This is why consolidation is a good bet for short-term viability and the deal is a good one for Staples for right now.

[ignostic]

I have some experience consulting with one of these companies, and I know they understand the importance of moving past paper and into things like tablets and ereaders. It's perhaps their primary focus to transition to new tech without confusing existing customers.

I agree it's a good idea for both companies. There's a perception that's perhaps unfair that these companies are complacent relying on paper and ink. These kinds of things are important to their current business, but both companies are more forward-thinking than most people give them credit for.

[JoeAltmaier]

Staples sells devices - pads, scanners, printers. That's a big part of their business.

[thornygreb]

Like the paperless office? Still waiting...

[cartoonfoxes]

The Myth of the Paperless Office is a wonderful read. https://mitpress.mit.edu/books/myth-paperless-office

[cptskippy]

I wouldn't say their market is disappearing because I don't ever think the need for pen and paper will ever disappear. It's definitely shrinking and there's market adjustments occurring but I don't see them ever going away.

[gnrlbzik]

Is that disappearing truly due to demand drop off or just because everyone is cutting something off?

[ryanjl]

This is smart for Staples, but the industry is still in trouble. They're going to get eaten alive by Walmart on the retail side and Amazon on the online side.

Staples and all the other office suppliers do best in two areas: printing services and consumables. Printing services have massive margins. And consumables, particularly remanufactured toner, are big cash cows. Business machines are low margin or loss leaders.

The stores are money losers. They would close them all if they could. They're used as feeders for their print business, value add for their contract customers, and sources of toner cartridges to be remanufactured.

Walmart, with its school supply aisle, is the largest office supply retailer in the world. Their supply chain is far superior to anything in the traditional office supply world, and in retail pricing, it shows.

Same goes for Amazon. They have massive economies of scale and a very well tuned supply chain.

Walmart has been aggressively putting the hurt on the retailers, particularly in Back-to-School season (Christmas for office supply retailers) in the form of advertising and moving the supplies towards the front of their stores.

Amazon dipped it's toe in the water with Amazon Supply. I'm surprised they haven't built an on-the-ground sales force to really expand it. I suspect that when they do, they'll take a big bite out of Staples.

[TillE]

At least in Germany, I've been surprised at Amazon's poor selection of office supplies. Not that we have great retail stores for office supplies here either, but at least I can go out and buy a small pack of rubber bands for 75 cents.

Amazon could (and probably should) be doing a lot better in this market.

[philwelch]

The supply room at my work is stocked by Staples. That might be a bigger business than their retail stores. We even use reams of printer paper as monitor risers.