Brick and mortar, e-business can work together

Go ahead. do it.   Words like these have launched many a company, many a new initiative.

Go ahead. do it.   

Words like these have launched many a company, many a new initiative. And that's what David Fuente, CEO of Office Depot, said to his staff when presented with a pitch for an e-commerce initiative. Fuente listened, asked how much it cost and then gave the OK. Pretty simple.

It makes you wonder why some executives feel they have to spend thousands of dollars and months of head-scratching to come up with an e-commerce strategy. In the end, e-business decisions are business decisions like any other. You look at your options, and you make a call: You may be right, you may not be right.

Fuente offered insight into his e-business strategy at the recent Forrester Forum in Boston. What happened after Fuente gave his IT leaders the go-ahead is instructive. Office Depot quickly formed an e-business unit and sent that group to San Francisco, far from the company's Florida headquarters. There were some communication problems because the group was out west, but, Fuente said, he'd do it again. A separation of distance frees the fledgling e-business group from home office bureaucracy and politics.

Office Depot, like any established retailer, faced the specter of channel conflict in selling over the Web. The company's brick-and-mortar stores do a booming business, and the company has healthy catalog sales as well. The retailer had been doing electronic data interchange with large customers, however, and those EDI links were the basis for a subsequent extranet to serve those customers. This effort was aided by one large customer in particular, MIT, which collaborated with Office Depot on the site.

Flipping Channels Is OK

Once the site was built, Fuente saw to it that the company's channels worked together. "Customers are not channel-centric. They like to buy things different ways," he said. The retailer made sure its big customers continued to have special service through the extranet. Small-business and off-the-street customers are served through Office Depot's public e-commerce Web site.

The channel synergy works in other ways as well. The Web presence benefits from brick and mortar in that customers can pick up items in person at the stores if they want. And, customers can return items to the stores rather than mail them back—a benefit that Web-only retailers cannot match.

Another benefit: Office Depot has its own truck fleet. Experience in making deliveries and in having friendly, helpful drivers is an advantage over other retailers that use shipping companies. Said Fuente: "The person our customer sees most is our driver."

Not everything is as shiny as polished mahogany, however. Office Depot finds itself competing with some of its suppliers, some of them PC makers, that sell over the Internet. Fuente's response is to drop those vendors and sell other vendors' equipment. Another challenge, he said, is tracking customer behavior across store, catalog and Web site. Office Depot is working on that one.

Fuente subscribes to online orthodoxies such as building brand name and accumulating customer information from the Web site. But the bottom line, he said, is as old as business itself. "The only successful companies in the Web economy will be the providers at the lowest cost and the highest quality." Easy enough said. But on the Web, who can go ahead and do it?

Are you getting it done or talking about it? Let me know at stan_gibson@zd.com.