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Net store eyes office supply market

In an attempt to repeat the Amazon e-commerce miracle, a new company is bringing a virtual office supply store to the Web.

In an attempt to repeat the Amazon miracle, a new company is bringing a virtual office supply store to the Web. launched today with the mission of providing office supply consumers with a service it says brick-and-mortar players can't compete with online.

"Office Depot is not using the Internet to its full economical advantage," said OnlineOfficeSupplies chief executive Paula Jageman. Office Depot has an online store and numerous physical stores.

Companies like Office Depot are faced with two major problems that a purely virtual store will not face, according to Jageman. One is that in every state where the store has a physical presence, the company must charge sales tax.

Another problem brick-and-mortar stores face is the risk of cannibalizing the business of their physical stores by undercutting their prices online.

"Office Depot has regionalized pricing for almost every zip code," said Jageman, who cited online prices for 100 manila envelopes ranging from $2.99 in Idaho to $3.99 in Virginia. Consumers that sign on to Office Depot's online store must enter a zip code in order to shop.

OnlineOfficeSupplies charges $3.21, tax-free outside Virginia and Maryland, for the same item, Jageman said.

OnlineOfficeSupplies faces additional competition from OfficeMax as well as a number of smaller online office supply vendors.

Fear of cannibalizing local stores has kept another office supply superstore on the sidelines--at least so far. Staples, which maintains an informational Web site, says it will add online shopping this summer.

OnlineOfficeSupplies' first target will be the back-to-school market, but its ultimate destinations are the small office-home office and large corporate markets, Jageman said.