Office Depot Is Dividing Its B2C and B2B Brands and Moving to the Cloud

It's fair to say the nature of the office has changed since the beginning of 2020. Thanks to the disruption caused by the COVID-19 pandemic, more people have shifted from traditional working environments to a work-from-home model.

And that doesn't seem likely to change anytime soon - even now the worst of the crisis is (hopefully) behind us. In fact, many Americans have gone on the record to say they'd start looking for another job if their employer would not allow them to continue working from home.

At this point you may be wondering what all this has to do with ecommerce. Well, as the nature of the office transforms - perhaps permanently - the nature of office supplies must also change in kind.

Office Depot

As one of the nation's largest and most well-known suppliers of stationary and other office materials, Office Depot has felt this shift in buying behavior all too keenly. Figures from the third quarter of 2020 showed that, while overall sales fell, ecommerce sales for combined B2B and retail transactions grew by over 20% compared to the previous year.

"We continue to drive a significant increase in demand from business customers and consumers through our ecommerce channel, which was up significantly over last year and now approaching over $1.2 billion in sales," said Office Depot CEO, Gerry Smith. "Our business has been a key source for our business customers and consumers to safely procure the products and services they need during the pandemic."

As people continue to work from home, the line between B2B and B2C sales is in danger of becoming ever more blurred, which is likely at least part of the reason Office Depot has taken the decision to delineate the two more officially.

B2B and B2C

Splitting the business into separate B2B and B2C operations has many benefits. It will allow Office Depot to put people with the most relevant expertise in the best positions and leverage that expertise to better serve both its retail and business customers.

It will also allow for a sharper delineation between these two customer types - which is especially relevant, given the change in people's working habits. It will also allow additional shareholder value to be unlocked as the two sides of Office Depot operate as two completely and independently traded businesses.

"We believe creating two focused, pure-play companies will unlock significant opportunities by improving our ability to meet the needs of our customers, while better matching assets and investment profiles of both companies to generate greater value for our shareholders," said Smith in a press release announcing the split. "In addition, positioning their respective growth trajectories and shareholder-specific return profiles will achieve appropriate market valuations, and allow both companies - and their 37,000 employees - to realize their full potential."

The consumer-facing division will focus on operating Office Depot's network of physical stores as well as the ecommerce platform at OfficeDepot.com.

Moving Forward

This shift has allowed Office Depot to devote resources to improving its operations across the board, such as with its recent switch to a cloud-first strategy.

Thanks to a move to an Oracle Cloud Infrastructure, with assistance from managed services provider, Bias, Office Depot has been able to reduce its operating costs and improve the experience for all stakeholders who engage with its IT presence - from staff to customers. Since switching to the new software, Office Depot has reported up to ten times improvement in online transaction processing and a massive reduction in response times and cloning time.

System stability has also been improved to 99.5% availability and, to demonstrate the improvement in real terms, Office Depot was able to process 6.5 million orders in a single day during the critical "back to school" period.

"Office Depot wanted to modernize and simplify their IT infrastructure, reduce operational costs, and enhance performance of their systems," said Cofounder and Executive Vice President at Bias, John Ezzell. "We were able to achieve all of our goals, both in terms of reducing operational costs and improving IT system performance throughout the organization. The efficiencies we introduced not only lowered costs for Office Depot, but they also dramatically improved the user experience for business users and the IT staff supporting them."

Final Thoughts

Splitting B2B and B2C is a smart decision for Office Depot, and will empower the company to make the most out of its people as we shift into the new normal for work and life. This, combined with the office supplier's move to cloud-based infrastructure, should give it all the tools it needs to succeed moving forwards.

You can hear Office Depot's Chief Retail Officer Kevin Moffitt and Senior Regional Director, Diversity & Inclusion Lead Josh Oates speak at eTail Palm Springs 2022, taking place February 28 to March 02 in Palm Springs, CA.

Download the agenda today for more information and insights.