Office Products Retail & Distribution Industry Trends

Consolidation

In the last decade, the economies of scale possible for large distributors with a sophisticated computerized inventory and order system have almost driven out midsized distributors. Small distributors still survive because of their high level of service.

E-commerce

The convenience and large economies of scale offered by ordering office supplies online from dealers with elaborate distribution networks are likely to push many business suppliers out. Suppliers that don't invest heavily in computer technology will be at a large disadvantage. The large retail chains currently get about a third of their sales from Internet and catalog ordering. Office supply distributors are increasing their online procurement activity.

Purchasing Associations

In response to the price discounts that the large office supply chains can get from manufacturers, many smaller retailers and contract stationers have joined purchasing associations, like TriMega Purchasing and National Purchasing, that can negotiate similar volume discounts. Purchasing associations are becoming more powerful as they join with other buying groups, resulting in a few major associations with substantial buying power.

"Hi-Low" Pricing Strategies

Most large office supply retailers, like Office Depot and Staples, use "hi-low" pricing strategies to sell higher profit margin products. Office supply companies charge low prices for traditional office supplies, like pens and paper, and more for cleaning products and paper towels. Office supply companies can earn higher profit margins on the high-priced items, because large companies are willing to pay more for the convenience of purchasing all supplies at one time or from one supplier.