Staples Gets a Surprising Roommate: Amazon.com
Well, that was easy.
Amazon.com (AMZN) has been rolling out its fleet of lockers for buyers since late last year. Now Reuters is reporting that the company is about to install some of those locker banks inside Staples (SPLS) stores.
Why lockers? Well, some shoppers aren't always home when deliveries arrive. Other customers are on the road. Some buyers may not have a permanent place to live in.
Oh, and once in awhile, a purchaser just doesn't want a spouse or family member to know what is being bought.
Amazon Means Business
Physical lockers may seem like odd additions for a Web-based retailer, but Amazon's had time to think it through.
The first lockers began popping up in convenience stores in Amazon's home city of Seattle in time for the 2011 holiday shopping season. It followed that up with entries into New York, London, and Washington, D.C., earlier this year.
The process is simple. Buyers electing to use the locker system are sent a digital code when the merchandise arrives at the desired location. There are many lockers of varying sizes, and punching the code into a central kiosk screen opens up the appropriate locker.
Lockers may seem to be a throwback fulfillment solution, but it's ultimately about Amazon extending its reach.
Staples Kisses and Makes Up
Office supply superstores have naturally had it rough during the economic lull. Companies aren't spending as much money on file cabinets and desk chairs. Ever-widening use of the Internet is also drying up demand for copier toner cartridges and the chain's namesake staples.
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Staples is holding up better than its rivals, but there's no joy in being the last chain standing if you're standing on quicksand.
Staples announced a broad restructuring plan in September. The retailer will be closing down stores and unloading its European printing business. There will also be a push to beef up its online operations, a subtle admission that Amazon's success is also eating into its business.
Analysts see Amazon growing its business by a hearty 32% this year. Wall Street sees Staples posting a slight decline in sales this fiscal year.
Wouldn't allowing lockers inside its stores be validating Amazon? Won't it encourage buyers to price Staples' goods against Amazon's wares, especially since shoppers can now pick up their orders at the same place?
Well, for Staples it's probably better to be the chain that stepped up, rather than letting it be Office Depot (ODP) or OfficeMax (OMX). It's better to respect Amazon as an ally than to lose to it as an enemy. Besides, if customers go in to retrieve their orders from Amazon's lockers it gives Staples a chance to sell them something else.
It's a gutsy call for Staples, but slapping that iconic red "easy" button isn't as simple as it used to be for the chain these days.
Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Staples and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com.
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