Sharing common goals in the small and medium-sized business market, Office Depot and Alibaba are set to launch a co-branded ecommerce website.
Both companies are looking to grow their market share of small- and medium-sized businesses in the U.S. Partnering with Office Depot will give Alibaba access to the office supply retailer’s 10 million business customers, a sales team of 1,800, and perhaps most importantly, a logistics network which the company said can reach nearly 99% of U.S. businesses with next-day delivery. Both companies are focusing on “customer acquisition”, an Alibaba spokesman said.
This will be the Chinese ecommerce giant’s first business-to-business collaboration with a major American company. It is also an indication that Alibaba is moving towards more direct competition with Amazon in its home market.
For Office Depot, the deal underscores CEO Gerry Smith’s desire to focus more on the business market. Smith joined the company in early 2017, and Office Depot has since prioritized business services as a way of adapting to an Amazon-dominated retail landscape and declining demand for traditional office supplies. In October 2017 the company purchased IT services provider CompuCom Systems for $1 billion. The strategy seems to be working. In 2018, Office Depot’s business-to-business sales became its biggest revenue generator. Its retail sales slumped in the past two years.
The “strategic collaboration” will allow Office Depot to offer business customers more, including access to Alibaba’s global network of more than 150,000 suppliers and its end-to-end selling platform, which offers services such as sourcing, financing and manufacturing. “The alternative for a business is trying to find high-quality manufacturing on your own, which is hard and takes a lot of time”, said John Caplan, President, North America B2B at Alibaba. “We’re making it easy for small businesses to source and reach the world.”
In addition to giving small and medium U.S. businesses the opportunity to sell beyond the United States through Alibaba.com, the deal is aimed at shortening delivery time. “This is a great catalyst for growth for small and medium businesses in the United States. We believe it is going to save them time, it is going to save them money”, Smith told Reuters.