In an effort to boost revenue after disappointing Q4 earnings, Office Depot is turning its attention to business-to-business (B2B) eCommerce, according to reports. The company reported that total net sales were down year over year by 6 percent for the quarter, and 3 percent for the full year ending Dec. 28.
Office Depot is changing tactics in 2020, leveraging its strength in catering to businesses, schools, healthcare organizations and government agencies. It can service these industries both online and offline through its Business Solutions Division (BSD), which offers products and custom procurement services, along with services from its own CompuCom technology division. CompuCom sells IT services to small and mid-sized businesses (SMB), and helps them procure, install and manage the hardware and software.
The Business Solutions Division and CompuCom account for about 60 percent of Office Depot’s total sales, the article said.
“In the year ahead, we are investing to drive profitable top-line growth in our BSD and CompuCom divisions, expanding our product and services offerings, and continuing to rationalize our retail footprint,” said Gerry Smith, CEO of Office Depot. “Our mission is to be a trusted platform for B2B products and services.”
In Q4, Office Depot said, capital expenditures totaled $27 million. In the same quarter one year earlier, capital expenditures totaled $66 million. Investment is lower retail operations, but eCommerce technology, distribution network and other customer services are all growing. The company’s Retail Division operates about 1,300 stores, but lost 54 stores in the last fiscal year. This year, store closures should be a “slightly” smaller number, Smith said on a conference call with investment analysts on Feb. 21.
Planned capital investment for this year wasn’t mentioned, but Smith said Office Depot’s growth strategy includes moving its product categories beyond paper and ink cartridges. He noted that the company could start offering items like furniture and breakroom products, and services like cleaning or copy and print. It’s also powering expansion via “cross-selling efforts through its eCommerce site, OfficeDepot.com, mobile app, sales reps, CompuCom technology consultants and Office Depot’s retail store network.”
In March, Office Depot and Alibaba launched a co-branded eCommerce site. Office Depot said the linkup gives Alibaba access to its 10 million customers and more than 1,800 sales agents. Conversely, Office Depot can offer its customers access to the Chinese online B2B giant’s 150,000 suppliers, expanding their options to find products or production.