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Staples relaunches B2B site

The office products retailer spends millions of dollars on updating its businesses-only online store, a sign that corporate e-commerce is finally catching on.

Staples has made a multimillion-dollar investment in updating its businesses-only online store, a sign that business-to-business e-commerce is catching on, despite the failure of many early start-ups that sought to capitalize on it.

The office supplies retailer unveiled Monday a new version of StaplesLink, a site exclusively for U.S. companies with more than 100 employees. The new site is capable of handling more visitor traffic than before and offers expanded features for tracking and returning orders, according to Staples.

Companies must be part of the retailer's Contract program--which allows companies to negotiate special prices on office supplies--in order to use the password-protected StaplesLink site.

As part of the Internet boom and bust, many e-commerce sites targeting corporate purchasing managers have flopped. But as was the case with online stores seeking to lure consumers, several major offline companies have built successful online divisions and have grown to dominate the market. Staples, Office Depot, Corporate Express and Boise Cascade are just some of the companies carrying the banner of business-to-business e-commerce after the demise of many much-hyped start-ups that pioneered the idea.

Staples is the second-largest office products retailer in the United States, behind Office Depot. It operates more than 1,400 stores in the U.S., Canada and Europe.

Since its launch in 1999, StaplesLink has become one of the company's most rapidly growing units with more than 20,000 businesses buying supplies on the site, said Lisa Hamblet, vice president of Staples' Contract division. Last year, $1 billion of Staples' nearly $11 billion in sales came from the Contract division. Sales through StaplesLink have grown 470 percent since its launch and now account for 70 percent of the Contract division's business, Hamblet said. Those sales are expected to log double-digit growth this year, and the volume of orders made through StaplesLink is expected to rise to 80 percent of the total over the next year and a half.

"StaplesLink is definitely a success story," said Hamblet. "We have exceeded our estimates and goals for the site that we set when we started it."

It's unclear whether StaplesLink is generating new sales or poaching its own offline customers. Nevertheless, the company has invested millions of dollars on hardware, software and information technology consulting--much of it supplied by IBM--to build and operate StaplesLink. It charges nothing extra to use the site.

However, Hamblet credits the site's appeal, in part, for fueling double-digit sales growth in the Contract division and helping the company stay competitive. She added that site also reduces costs: Customers who order online tend to place fewer, larger orders than companies placing orders by fax or phone, thus reducing paperwork and administrative duties both for Staples and its customers. Online orders also tend to have fewer errors, reducing returns by 35 percent on average, Hamblet said. Fewer returns are good for Staples' bottom line, since the company sends out trucks to fetch returned items from its Contract customers.

"The site has helped drive efficiencies in our business," said Hamblet. "The investment has been well worth it."

And the lack of "transaction" fees, a component many business-to-business Internet start-ups made central to their business models, is one of the keys to StaplesLink's acceptance, according to Hamblet. "The core to our success is we're free," she said.

A U.S. Census Bureau report released last year said transactions between businesses constituted 94 percent of e-commerce in 2000. The vast majority of those transactions, however, were sent over private networks using proprietary Electronic Data Interchange formats, not over the Internet. A newer set of Census Bureau statistics on e-commerce is due this month.