Global Retail   //   March 5, 2019

‘We’re not going to private-label a customer’: Alibaba and Office Depot team up to pitch small businesses

Alibaba and Office Depot are launching a joint B-to-B site in order to thwart competition from Amazon Business.

The new co-branded marketplace, called “Office Depot on,” will allow small and medium businesses to buy products and services from Alibaba’s global network of over 15,000 suppliers. Alibaba, in turn, will be able to offer shortened delivery time on products by using Office Depot’s fulfillment system. They’ll also offer online and in-store deals for Office Depot products here.

The partnership is yet another way that Office Depot is trying to invest more in business services, having also rolled out a co-working space earlier this year. While Office Depot started as a consumer services company, that part of the business has taken a hit as more people buy home and office supplies online through sites like Amazon.

For Alibaba, it’s an interesting category through which to make its foray into the U.S. The company has seen success in China with both U.S. DTC brands as well as high-end luxury via Tmall, but its partnership with Office Depot is its first major partnership with a U.S. retailer.

Alibaba’s strategy is in playing up Office Depot’s personal relationships with small businesses as its biggest opportunity is in luring small businesses, fed up with Amazon’s ever-changing packaging or selling rules.

And it sees a marketing advantage in partnering with a brick-and-mortar retailer.

“Office Depot has an intimate, personal relationship with small businesses here in the U.S., so by leveraging the trust that Office Depot has, with the power and breadth of, we think it’s a way to accelerate helping small businesses,” John Caplan, head of North America B-to-B at Alibaba said.

Caplan, in a joint interview with Office Depot CEO Gerry Smith, didn’t answer directly when asked how the new service will compete with Amazon Business, Amazon’s own marketplace for business supplies that was projected to reach $10 billion in sales volume last year. But Smith offered up some examples of what Office Depot and Alibaba won’t do, citing moves that Amazon has been criticized for in the past.

“We really do think it brings a friendly platform to the U.S. business customer, and I think that’s a really important distinction — we’re not going to go try and private label a customer, we’re not going to scrape data. We’re going to build a trusted platform [small and medium businesses] can use to save money and save time,” Smith said. The company is targeting small and medium-sized business owners and is positioning itself as a friendly partner to both them and the manufacturer.

Smith said that talks with Alibaba began after Office Depot’s investor day last May, when the company said it wanted to build a marketplace platform with small-to-medium-sized businesses.

In order to push U.S. customers to Alibaba, Office Depot’s 1,800 sales agents will be reaching out to current Office Depot customers. Office Depot will also promote the Alibaba marketplace with in-store branding.

Andrew Lipsman, a retail and e-commerce analyst for eMarketer, said that Office Depot and Alibaba will face an uphill battle in that most small business owners are already used to buying on Amazon as consumers, and thinks that the two companies will have to also create a more seamless buying — not just pitch themselves as a friendlier platform — to win over customers.

“With the buying process on Amazon, they’ve built up the B-to-B buying perspective to largely mirror the easy transition for the buyer, so honestly once they’ve made the transition, it can be hard to switch them back,” Lipsman said.

Jason Goldberg, chief commerce strategy officer for Publicis, also notes that Office Depot’s decision to turn an existing marketplace like Alibaba is risky in that should the relationship turn sour, “all those customers would now have in their bookmarks.”

And in the age of Amazon, the opportunity to have an endless aisle is enticing. “If plugging into Alibaba allows you to have an endless aisle offering, it makes you that much more competitive,” Lipsman said.

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