category-intelligence-on-office-supplies 

Office Supplies Industry: Global Drivers and Constraints

Emphasis on self-branded products:

Large suppliers such as Staples and Office Depot bet on their self-branded products, as they have higher margins than other branded products. Staples, for instance, has generated 30 percent of its revenue in recent years from these types of products and significantly increased the number of similar products being launched. Source: Beroe Analysis

Era of Online Ordering:

Staples has already shifted its investments to its online portal to make online ordering easier and more convenient for its customers. Amazon Business and eBay have entered the office supplies market, as office supplies category fits into their existing sets of products.

Increasing Service Capabilities of Suppliers:

Suppliers in this industry are expanding their product portfolio by including non-core office supplies such as janitorial supplies, technical equipment, and break room supplies in their product list.

Increasing Number of Offices and Job Opportunities, Mainly in the Emerging Markets:

Focus on education, increasing literacy rates and increasing job opportunities, coupled with MNCs increasing their geographical capabilities across the globe, are the major drivers of the demand for office supplies products (e.g. the Digital India Campaign in India, and industrial development in LATAM, mainly in Mexico, Brazil, etc.).

e-Auctioning:

Buyers prefer procurement through e-auctions, as they get clear visibility and can access supplier capabilities. Along with Global suppliers, even the local suppliers are focusing on participating in e-auctions as it gives them the scope to bid on and participate in huge tenders.

Global Suppliers in LATAM:

Currently, the supply market has local and regional players who dominate the market. The global suppliers have entered the LATAM market only recently. In 2015, Office Depot entered LATAM as Office Depot de Mexico, while Lyreco entered the Mexican market through a partnership with Principado. LATAM has witnessed the entrance of MNCs, the US-based firms in countries, such as Brazil, Colombia, and Mexico. The suppliers, in order to cater to the needs of the MNC's office supplies across the country, are looking for M&As. In 2015, Office Depot bought a 51 percent stake in Grupo Pisa, which is a local group of LATAM wholesale suppliers.

Digital Marketing:

Suppliers are increasingly leveraging various online media formats, including mobile-based applications and social networking sites, to expand their digital presence. Officeworks invests a significant amount of resources in their social media engagements, with the objective of elevating everyday products into things that people like and share.

Raw materials:

Raw materials are one of the major parts of the cost structure for office supplies. Therefore, any increase or decrease in the prices of raw materials will affect the cost of office supplies products. Major raw materials used in office supplies include:

  • Paper
  • Rubber
  • Steel
  • Wood
  • Plastic

Given the changing industry dynamics, the possibility of changes in supplier and changing paper prices, a contract length of three years in matured markets and a contract length of one to two years while engaging with the local suppliers in emerging markets is suggested. This, combined with structured continuous supplier management would ensure better results from the contact.