Monday, November 9, 2015

Who are the competitors of Staples and Office Depot?

In previous posts in this blog, my Empoprise-IE Inland Empire blog, and other outlets, I have tended to take a rather expansive view of the competitors for any given industry. For example, back when Amazon first emerged as a bookseller, perhaps all of us didn't realize that the bookseller would even be a threat to Borders and Barnes & Noble, much less Tower Records, Radio Shack, and Kroger. Yet as we moved away from the idea that you had to go to a bookstore, or a record store, or an electronics store, or a grocery store, it soon became apparent that Amazon could disrupt numerous markets - well, provided that the OnTrac issue didn't derail it.

Definitions of competition are important to Staples and Office Depot. If the two companies want to merge, they need to convince government regulators that there will still be healthy competition in the market.

Enter the American Postal Workers Union, which opposes the deal. According to the South Florida Business Journal, the APWU contests the companies' claims of healthy competition:

[I]f the FTC gives Staples the regulatory approval to buy Office Depot for $6.3 billion, the resulting company would have $14 billion in combined sales – 14 times greater than its nearest competitor in the office supply market....

It alleges that retailers such as Wal-Mart, Amazon and and Target are not true competitors as Staples implies.

At first glance, this seems ridiculous. Wal-Mart and Target sell basic office supplies, and Amazon sells every office supply known in the Milky Way galaxy. How can the APWU make such a claim?


It says there will be "no reasonable alternatives" for large businesses who contract with Staples and Office Depot, and their costs will rise for office supplies.

APWU reminds people of how businesses operate. Let's say that you're at a medium or large size business and you need pens. Do you send your office assistant out to the store to get pens? Heck no, because then he or she has to record "Get supplies" on a timecard, drive over to the store, use a credit card or petty cash, bring the stuff back, charge the company for miles driven, fill out the appropriate paperwork, and then get back to real work.

No, what the businesspeople do is set up an account with Staples or Office Depot. Now the office assistant can stay at his or her desk, order the supplies online using the corporate account, and be done within a few minutes. Much more convenient.

Now you can certainly set up an online account with Walmart, Target, or Amazon, but with the exception of Amazon, they don't really market their online purchasing services for business customers. Walmart's Corporate Accounts allow businesses to purchase...Walmart gift cards. If Target has any type of corporate account, they certainly don't market it well because I can't find it.

So while I personally believe that Walmart, Target, and Amazon ARE competitors to Staples and Office Depot, I can understand the counter-argument.

Of course, the APWU's opposition to the Staples-Office Depot deal has nothing to do with promoting competition. In fact, the opposite is true:

The APWU is fighting a secretive deal between...the U.S. Postal Service and Staples that jeopardizes mail service and local post offices – along with thousands of living-wage jobs.

The Postal Service and Staples launched a no-bid, trial program in the fall of 2013 that established postal counters in 82 of the office-supply stores, which they planned to expand to locations across the country. The knock-off post offices were staffed with low-wage, poorly-trained Staples employees rather than USPS employees.

The APWU objected to the program, asserting that the American people have a right to post offices staffed by highly-trained, uniformed Postal Service employees, who are sworn to safeguard the mail and who are accountable to the people. The union offered to participate in the trial program if the postal counters in Staples stores were staffed with USPS employees, but postal managers and Staples rejected the idea. They also refused to provide the union with information about the deal.

Just modify "low-wage, poorly-trained Staples employees" with "low-wage, poorly-training, NON-UNION Staples employees" and the APWU's opposition to anything benefiting Staples becomes very clear. From the APWU's perspective, it would be best for the Staples-Office Depot merger to be rejected and for BOTH companies to declare bankruptcy, therefore ending any threat of non-union USPS offices - at least until Walmart, Target, and Amazon contract with the USPS.

Of course, Staples and Office Depot have their own economic motives. If the merger goes through, the combined company would love to get USPS money to operate postal centers in their stores, and to shut every existing USPS location down.

Follow the money.

And one more thing: after I started researching this post, I began seeing ads like this on my browser:

So far I haven't seen any such ads from Staples or Office Depot.
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