Office Depot Inc. is partnering with Alibaba Group Holding Ltd.’s business-to-business unit as the two companies seek to capitalize on opportunities selling to small- and medium-sized enterprises.
Through the arrangement, Office Depot
will steer business customers toward Alibaba.com, the Chinese e-commerce giant’s wholesale trade site, when they wish to purchase items beyond traditional office supplies. Customers will also be able to take advantage of Office Depot’s fulfillment network if they buy items through Alibaba.com’s marketplace, the companies announced Monday morning.
Shares of Office Depot shot up 6.7% in premarket trade Monday, putting them on track to open at the highest price seen during regular-session hours since October 2017. Alibaba’s stock rallied 1.5% ahead of the open.
John Caplan, who heads Alibaba’s
B2B efforts for North America, gave the example of a kayak designer who orders office supplies through Office Depot and has a relationship with one of the store’s salespeople. Under the partnership, that business owner will be introduced to Alibaba.com’s manufacturing offerings, which may help if the small business wants to branch out into designing canoes as well. The Alibaba.com platform lets business owners search for verified manufacturers, negotiate prices with them and ultimately make payments.
“The alternative for a business is trying to find high-quality manufacturing on your own, which is hard and takes a lot of time” Caplan told MarketWatch. “We’re making it easy for small businesses to source and reach the world.”
Using the same example, if business owners were to order canoes through the Alibaba.com platform, they would have the option to use Office Depot’s distribution network to help get the canoes to boating supply shops, Caplan said. Office Depot can provide next-day delivery to 99% of U.S. businesses, according to a release. Businesses will receive discounts on Office Depot products if they make a certain amount of purchases through the Alibaba.com marketplace.
Stampede of the ‘decacorns’: Here are the big-name startups preparing for 2019 IPOs
MarketWatch previously reported on Alibaba’s efforts to turn the Alibaba.com business into a marketplace modeled after Tmall and Taobao, its two big Chinese consumer-facing e-commerce sites.
Office Depot Chief Executive Gerry Smith said that his company has become more focused on selling to businesses, with B2B sales now comprising 69% of revenue, up from 49% when he began his tenure about two years ago.
“We think this is a catalyst for growth and a platform that makes small businesses successful, accelerating both of our strategies,” Smith told MarketWatch.
Office Depot’s stock has run up 41.8% over the past 12 months through Friday, while Alibaba shares have tacked on 2.3% and the S&P 500 index
has gained 4.2%.
Want news about Asia delivered to your inbox? Subscribe to MarketWatch’s free Asia Daily newsletter. Sign up here.