Staples provides commodities

mark's picture

Now if any business should be fearful of Amazon, I would say a likely candidate would be Staples. Why? The stuff they sell is standardized commodity types of products. You don't need to go to the store to tangibly touch a twenty four box of pens that you buy regularly! Most of their stuff is similar.

Planning purchase of office supply materials is usually easily done. How often do you need a ream of paper right this moment? Probably not often if you are a well run business. Since you don't need it immediately, you can search out better prices on the net and have it delivered in a couple of days. No big deal.

Private equity firms are discussing a purchase of Staples. The strategic question is how would they build a competitive moat around their business. Would they put more on-line and reduce bricks and mortar? Then, they are squaring directly up against the Amazon monster! Bad idea. They provide other services for printing, but they are up against a number of competitors here as well. Office furniture? Lots of competition there too.

Staples is in a tough position. PE firms must have too much cash. You give a kid ten bucks, he surveys his purchasing decisions closely. You give him $5000, he spends like a "drunken sailor."

Copyright 2017 Mark T. McLaren