Businessmodel of Office Depot

Customer Segments

Office Depot has a segmented business model, with customer groups that have slightly different needs. The company targets its offerings at consumers and businesses in need of office supplies.

Value Proposition

Office Depot offers three primary value propositions: convenience, cost reduction, and brand/status.

The company offers convenience by making life simpler for customers. It acts as a single source for core office supplies, print and document services, business services, facilities products, furniture, and school essentials. It also enables customers to pick up products in-store within an hour when they order online.

The company reduces costs by buying most items directly from manufacturers instead of wholesalers and keeping overhead low. It also offers free delivery on qualifying orders totaling $35 or more.

The company has established a powerful brand due to its success. It generates annual revenues of $14 billion, employs 49,000 workers, and serves customers in 59 countries with over 1,800 retail stores. It maintains several prominent brands, including Office Depot, OfficeMax, Grand & Toy, and Viking, TUL, Foray, Brenton Studio, Ativa, WorkPro, Realspace, and HighMark.

Channels

Office Depot’s main channels are its office supply stores, websites, contract sales force, an outbound telephone account management sales force, and direct marketing catalogs. The company promotes its offerings through its social media pages, online/TV/radio/newspaper advertising, e-mail marketing, and loyalty programs.

Customer Relationships

Office Depot’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees. Its website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone, e-mail, and 24/7 live chat support, as well as customer support from in-store associates.

Key Activities

Office Depot’s business model entails distributing products and delivering related services to customers.

Key Partners

Office Depot’s key partners are the manufacturers, industry wholesalers, and other primary suppliers that provide the merchandise it sells in its stores. It also partners with cooperative organizations to provide value to public sector agencies and schools through options such as everyday low pricing and aggressive rebate structures.

These include National IPA and NASPO ValuePoint. Lastly, the company maintains an affiliate program through which it invites third parties to promote it through their platforms (websites, mobile apps, etc.). Referrals that lead to a purchase result in paid commisisons.

Key Resources

Office Depot’s main resources are its physical resources, which include its network of stores and distribution centers located throughout the U.S. It also maintains important human resources in the form of its store associates, direct sales personnel, and customer service staff members.

Cost Structure

Office Depot has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of goods sold, a variable cost. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

Office Depot has two revenue streams: revenues it generates from sales of its products and revenues it generates from sales of its services to customers.