How Staples Hopes To Achieve E-tail Innovation

Amazon.com, Apple, Walmart.com — with their broad consumer appeal, it’s easy to believe that each of these sites was among the top 10 online retailers in 2011.

It’s perhaps just as easy to overlook a category of merchant that also claims three of the top ten online retail spots: office supplies. In fact, one Massachusetts-based office supply retailer holds claim to the number two spot overall, ahead of both Apple and Walmart.

The company is Staples. Through its Staples.com, StaplesAdvantage.com, and Quill.com web channels, the company generated more than $10 billion in online sales.

If that web revenue figure keeps growing into the future, it will be because Brian Tilzer helped get it there. A former Linens ‘n Things Senior Vice President and Accenture consultant, Tilzer now serves as vice president of Staples’ business development and e-commerce operations. Lately, he’s been making the rounds within the business media circle to promote his company’s latest web sales growth initiative, a sort of “e-tail think tank” located in Cambridge, Mass.

The venture has a catchy name, too: Staples’ E-Commerce Innovation Center, it’s called, will open later this year, sometime between the beginning of spring and the end of summer 2012. The Innovation Center will house several teams of young brainiacs, aiming to synthesize creativity, business savvy and technological innovation into a host of new products to continue Staples’ web sales growth.

“Staples’ new E-Commerce Innovation Center will become the home to some of the world’s best e-commerce talent,” Tilzer explained in an official company release, “with the goal of rapidly bringing breakthrough new ideas to market.”

Tilzer compares the investment Staples is preparing to make in new staff — tripling its IT and e-commerce headcount over the next three years — to the company’s spending strategy in its 2001 fiscal year, when it made a significant investment in online retail. “We were a very early investor,” Tilzer says, which paid off later (refer back to Staples’ overall e-tail ranking).

At the time, Staples’ e-commerce operations were just approaching profitability (see CEO Thomas Stemberg’s comments from March 2001 (1)). And in its 10-K, the company specifically mentioned “the write-down of investment values in various e-commerce companies” as having contributed to down profits. Indeed, profits fell from $315 million in fiscal 2000 to $59.7 million in 2001, before rising back up to $265 million in 2002.

To compare to that progression adds weight to this new phase of talent acquisition. Tilzer says the new hires will bring varied talents to the table — creative, business, tech. But at Staples’ online job board, a lot of the emphasis is placed on — surprise! — computer programming skills. They’re hiring software developers (Bachelor’s degree, two years experience with web app development, five years of Java, and an alphabet soup of other software platforms), as well as platform architects (Master’s in comp sci, five years Java, five years with IBM WebSphere Commerce — experience in “implementing a major search engine” a major plus). Surely some of the new talent will be focused on creating a new shopping experience for tablet users, an area Tilzer says is on the short list of key foci for Staples.

All this brainpower will surely help contribute to an ever-improving commerce experience at Staples’ own web retail properties. But could the ideas and products that come out of the Innovation Center eventually be licensed to other businesses? Tilzer didn’t say no — but he didn’t really say yes either. Instead, he noted Staples’ larger goal in terms of customer service: “We not only help businesses operate, we help them grow.”

Innovating takes time, so it may be a while before this investment pays off (there’s a reason why Tilzer compared this move to the company’s investments in 2001). It’s even hard to say what the eventual output will look like: an app, a service, something for the back end? But Staples is at least being clear about its strategy for capturing that next innovation, whatever it is and whenever it comes: spend a bunch of money on a bunch of smart people.