Online Sales Hit 50 Percent at Corporate Express

Office products supplier sees investments in front-, back-end systems paying off

Broomfield, CO  May 21, 2003  Corporate Express this week reported that online sales are now accounting for more than 50 percent of its average daily office products sales as the company's investments in both front-end e-commerce and back-end fulfillment and logistics technologies appears to be paying off.

The company said that since the re-launch of its online procurement system, E- Way, in August 2002, Corporate Express has seen a significant increase in the adoption of its e-commerce systems. Much of the growth in online sales has come as customers have replaced phone and fax as their principal means of placing orders.

Wayne Aiello, vice president of e-business services for Corporate Express, noted that many of Corporate Express' larger customers have already invested in e-procurement solutions and are themselves looking to drive increasing purchasing volumes through those systems. "They're trying to maximize their [return on investment] and get as many vendors as they can on the system," he said.

Corporate Express' e-commerce solutions include integration with its customers' e-procurement systems using electronic data interchange (EDI) or XML. The company said that to date it has integrated with more than 750 customer e-procurement systems, including Ariba, Commerce One, SAP, Oracle, PeopleSoft and IBM Global Purchasing, as well as numerous marketplaces providing office products. With a relatively short implementation to do the integration between Corporate Express and a customer's e-procurement system  20 days on average, according to Aiello  moving office supplies ordering online can offer a quick hit to obtain the process savings that electronic purchasing promises.

On the other hand, smaller companies can use the Corporate Express Web site for placing orders online and yet still maintain much of the functionality available through e-procurement systems, such as the ability to route orders for approval, block purchases of certain products, do budgeting online and check inventory on items.

Aiello said that Corporate Express has put together an educational program to ensure that these smaller customers are aware of the functionality available to them through the site, in addition to the company's marketing and education efforts intended to drive adoption among employees of larger companies.

Industry analysts such as Aberdeen Group have pointed out that e-procurement and online purchasing can provide customers with such benefits as reduced process costs, lower prices, foreshortened purchasing cycles, less maverick spending and lower inventories of indirect materials. Aiello said that typically Corporate Express is seeing its larger customers looking to gain better control over their spend and to cut down their process costs, while smaller customers are more interested in gaining access to more information as they make their purchasing decisions.

In addition, Joe McDonald, Corporate Express' managing director for global accounts, noted that the company's online offering is able to provide consolidated spend reports to customers in any of the 28 countries where the office products supplier operates, so that a customer that has operations in various countries but that isn't necessarily running a single, global procurement system can still gain access to aggregated information on its total spend for indirect materials purchased from Corporate Express.

Beyond customers' motivations, Aiello also attributed the growth in online sales to the company's ongoing investments in its technology infrastructure. "We have invested a lot in e-commerce over the past two or three years, and last August we released a new version of our Web site that took advantage of a lot of the technology that we had put in, with really a whole new front face to our distribution system," Aiello said. "That front end has paid off, and we've seen the growth, with the number of new customers using it increasing dramatically."

That investment in the front end has been accompanied by investments in Corporate Express' back room operations, too. Tim Beauchamp, senior vice president of distribution, highlighted Corporate Express' investment in its distribution and logistics capabilities to provide higher service levels, including warehouse management systems, radio frequency, pick-to-voice and other technologies.

"The back room is very technology-intensive," he said, "to allow us to have very good throughput within our warehouse organization and to allow us, from a supply chain [perspective], to source not only from our own warehouses but to be connected to a number of wholesalers to provide for our customers a very high fill rate. Our typical distribution center might handle about 9,000 stock-keeping units, but there are about 35,000 [SKUs] in this industry, and we can source those other products, marry them up in our warehouses at night and deliver them to our customers the next day."

Those investments, he said, have created the infrastructure necessary to provide customers with up-to-date inventory information online and to let many customers postpone their orders until as late as five or six o'clock in the evening. "We're able to source that product and pick, pack and ship it to get it our customer the next day," he said. "So the convenience of product selection and the later ability to order allows the [online business] to continue to grow."

Aiello said that Corporate Express' target for this year is to have 65 percent of its daily office products sales running through the online channel by the end of 2003. "We're not sure where the upper limit will end up being," he said, "but we're certainly going to target 65 [percent] this year and continue to grow that as much as we can." He added that the company is doing between eight and 10 new integrations between Corporate Express and a customer's e-procurement system each month.

Corporate Express is a division of Amsterdam-based office products company Buhrmann. For 2002 Corporate Express reported North American sales of 4.9 billion euros, or about $5.7 billion at current exchange rates.

Companies in this article