Competitive Pricing Trends OFFICE SUPPLY INDUSTRY January/February 2015 2015, Marketyze LTD. This report is M arketyze Proprietary Data. Please 1 Tw Eith L qauestions, V I V o r to PuH E N si tats. X TAMPA contact us at info@marketyze.com se O these WWW.MARKETYZE.COM
Table of Contents Clash of the Titans.3 How are the major players managing their pricing? A comparison of 1,462 office supply products across Amazon, Walmart, Office Depot & Staples. The e-tailer challenge...5 E-tailer pricing tactics and a comparison of 1,315 office supply products across Amazon, BettyMills.com, OfficeSupplies.com & Shoplet.com Additional Category Analyses..7 An in-depth view of price behavior over a set of popular categories a. School Supplies b. Printer Ink c. Copy & Printer Paper Volatile Product Behavior...11 An example of volatile products and how their prices fluctuate Did Someone Say Dynamic Pricing?...12 Summary and conclusions Key Learnings...13 Data Collection & Methodology. 14 Additional Categories..15 About Marketyze..16 2015, Marketyze LTD. This report is M arketyze Proprietary Data. Please contact us at info@marketyze.com with questions, or to use these stats. 2
Clash of the Titans! Amazon - Walmart OfficeDepot - Staples This analysis includes a sample of 1,462 office supplies products all sold at OfficeDepot.com, Staples.com, Walmart.com & Amazon.com over the period of Jan 21 st Feb 21 st 2015 Graph 1: Average Price behavior over time Retailer Start Price End Price $ Change % Change Staples $ 43.16 $ 43.06 $ (0.10) -0.23% Office Depot $ 43.20 $ 43.00 $ (0.20) -0.46% Walmart $ 34.30 $ 31.57 $ (2.73) -7.96% Amazon $ 29.40 $ 29.28 $ (0.12) -0.41% Insights Ø The similarity in Office Depot and Staples pricing make it difficult to differentiate their graphs. Ø Office Depot, Staples and Amazon s average prices were stable across the period. Ø Amazon had the lowest average price of the four retailers. Ø At the beginning of the period the average price difference between Walmart and Amazon was $4.90. On January 26, Walmart reduced its prices, bringing the average price to only $2.29 above those of Amazon. Ø During the course of the report Amazon had the lowest prices 79% of the time, Walmart 46% of the time, Office Depot 10% of the time and Staples 5% of the time. o The aggregate is higher than 100% because when multiple retailers had the same lowest price they were all counted 3
Graph 2: Price updates over time Table 2: Price changes across entire assortment Increased Prices Decreased Prices Amazon and Walmart are the most price competitive and are implementing a dynamic pricing approach while Office Depot and Staples put less emphasis on price as a differentiator. The dynamic pricing at Amazon and Walmart is explained by the fact that both players act as marketplaces in addition to being sellers themselves. 4 Total Updates Items Updated % Changed Avg. per Item officedepot.com 153 97 250 195 13.3% 1.3 Staples.com 221 192 413 173 11.8% 2.4 Walmart.com 1726 2565 4291 1237 84.6% 3.5 Amazon.com 1571 2086 3657 863 59.0% 4.2 Table 3: Number of price updates per item Not Changed 1 Change 2-3 4-6 7-14 15+ officedepot.com 1267 145 50 - - - staples.com 1289 86 54 24 9 - Walmart.com 225 251 493 365 127 1 amazon.com 599 242 297 161 117 46 Insights Ø Walmart has updated the prices of over 25% of the items on multiple occasions (graph 2). Ø Amazon updated 10%-12% of the items on a regular basis (graph 2). Ø Walmart has updated almost 85% of the 1,462 items and Amazon has updated nearly 60%. Staples and Office Depot have updated prices for a little more than 10% of the assortment (table 2). Ø Although Walmart has updated prices on the most items, Amazon has made the most price changes per item (table 3).
The e-tailer Challenge This analysis has been performed across a sample of 1,315 office supplies items all sold at Shoplet.com, BettyMills.com, OfficeSupply.com & Amazon over the period of Jan 21 st Feb 21 st 2015. Graph 3: Average Price behavior over time e-tailer Start Price End Price $ Change % Change Shoplet.com $ 26.95 $ 28.89 $ 1.94 7.20 % Officesupply.com $ 30.79 $ 30.77 $ (0.02) -0.06 % Bettymills.com $ 26.57 $ 26.57 $ - 0.00 % Amazon $ 22.06 $ 20.76 $ (0.30) -1.36 % Insights Ø BettyMills and OfficeSupplies average prices were stable across the period. Ø Shoplet increased many of its prices on January 30 resulting in an average jump of over 7%. Ø Amazon has the lowest price of the four e-tailers. Ø During the course of the report Amazon had the lowest prices 61% of the time, BettyMills.com 20% of the time, Shoplet.com 10% of the time and OfficeSupply.com 4% of the time. (There were few cases where mulitple e-tailers were lowest price on the same resutling in an aggregate of 100%). 5
Graph 4: Price updates over time Table 5: Price changes across entire office supplies assortment Increased Prices Decreased Prices Total Updates Items Updated % Changed Avg. per Item Bettymills.com - - - - 0% 0 Shoplet.com 1304 769 2073 1148 87.3% 1.8 officesupply.com 549 221 770 309 23.5% 2.5 amazon.com 1324 2167 3491 741 56.3% 4.7 Table 6: Number of price updates per item Not 1 Changed Change 2-3 4-6 7-14 15+ Bettymills.com 1315 - - - - - Shoplet.com 167 224 924 - - - officesupply.com 1006 88 122 99 - - amazon.com 574 206 245 120 102 68 Ø BettyMills.com did not update their prices over the period covered by the report. Ø OfficeSupply.com performed several price updates, each impacting ~8% of the product assorment. Ø Shoplet performed two major price updates, each impacting over 70% of the product assortment. Ø Amazon changed the prices of 18%-20% of its assortment on a daily basis. Ø Amazon is the most volatile e-tailer of the four. Ø While Shoplet.com has changed prices across the majority of the items, Officesupply.com made more frequent updates and was more dynamic. Amazon is the most price competitive and is utilizing a dynamic pricing approach whereas the other e-tailers did not implement any noticeable pricing tactics during the report period. 6 This is interesting as e-tailers require less of an effort to update prices dynamically.
Additional Category Analyses The following provides an in-depth view of price behavior of Walmart, Amazon, Staples and Office Depot over a set of popular categories during the period of Jan 21 st Feb 21 st 2015. Graph 5- Average Price over time of 156 School Supply items Graph 6- Price updates across the 156 items Table 7: Price changes across the school supplies category Increased Decreased Total Items Prices Prices Updates Updated % Changed officedepot.com 9 0 9 9 5.8% staples.com 3 3 6 6 3.8% Walmart 195 261 456 128 80.8% amazon.com 204 249 453 84 53.8% Ø Office Depot & Staples made minor price changes across this category. Ø Walmart & Amazon are battling it out on price while Staples is considerably more expensive on average. 7
Graph 7 - Average Price over time of 106 Printers Ink items Graph 8 - Price updates across the 106 items Table 8: Price changes across the printers ink category Increased Decreased Total Items Prices Prices Updates Updated % Changed officedepot.com 1 1 2 1 0.94% staples.com - - - - 0% Walmart 160 218 378 91 85.8% amazon.com 191 209 400 69 65.1% Ø Amazon s average price is consistently the lowest of the four retailers. Ø Staples has not made any price updates and Office Depot updated the price of only 1 item. Ø Interestingly Walmart is not as competitive in this category. 8
Graph 9 - Average Price over time of 87 Copy & Printer Paper items Graph 10 - Price updates across the 87 items Table 9: Price changes across the copy & printer category Increased Decreased Total Items Prices Prices Updates Updated % Changed officedepot.com 9 9 18 9 10.3% staples.com 39 47 86 31 35.6% Walmart 138 204 342 79 90.8% amazon.com 54 93 147 51 58.6% Ø Walmart & Amazon are battling it out on price. Ø Staples reduced prices at the beginning of February, making it lower on average than Office Depot. Ø Compared to others, in this category Staples has been active in terms of price updates. 9
A comparison of retailer price change tactics per category Table 10 Number of price updates across Printer Ink 106 items Not Changed 1 Change 2-3 4-6 7-14 15+ Officedepot.com 105-1 - - - Staples.com 106 - - - - - Walmart 15 19 29 23 20 - Amazon.com 37 13 12 16 26 2 Table 11 Number of price updates across Copy & Printer Paper 87 items Not Changed 1 Change 2-3 4-6 7-14 15+ Officedepot.com 78 2 7 - - - Staples.com 56 16 9 3 - - Walmart 8 13 18 36 12 - Amazon.com 36 21 17 6 7 - Table 12 Number of price updates across School Supplies 156 items Not Changed 1 Change 2-3 4-6 7-14 15+ Officedepot.com 147 9 - - - - Staples.com 150 6 - - - - Walmart 30 33 45 27 21 - Amazon.com 72 18 18 21 27-10
Volatile Product Behavior The following two items exhibited particularly volatile pricing during the report period. Kodak Ultra-Premium Photo Paper, High Gloss, 11" x 17", 10 Mil, Pack of 20 Min Price Max Price % Diff Walmart $ 28.02 $ 46.62 66% Office Depot $ 22.49 $ 44.99 100% Staples $ 30.89 $ 33.49 8% Amazon $ 22.49 $ 30.46 35% Sharpie RT Retractable Permanent Markers, 12 per Package Min Price Max Price % Diff Walmart $ 16.73 $ 27.49 64% Office Depot $ 22.49 $ 24.69 10% Staples $ 19.99 $ 19.99 0% Amazon $ 16.73 $ 19.49 16% 11
Did Someone Say Dynamic Pricing? The brick-and-mortar office supply business is on the decline while online sales are growing. According to Forrester Research, office products sold online hit $9.2 billion in 2014, accounting for 24 % of the overall office supplies category. In this report: Ø Amazon and Walmart are battling it out on price across the entire category. Ø While we expected to see leading e-tailers (apart from Amazon) update prices more frequently than brick-and-mortar, this was not the case. Ø Walmart and Amazon are the most price volatile players in this market and update prices almost on a daily basis. Ø Amazon is the lowest price retailer across the thousands of products included in the study and Walmart is close behind. Ø Walmart is not as competitive when it comes to printer ink as it is across other office supply categories. Ø It appears that Staples updates prices across the majority of its assortment only once per month. Ø Office Depot is the least volatile retailer making infrequent price changes. Ø Prices for certain items can fluctuate dramatically across each retailer even doubling over a short period of time. 12
Key Learnings The office supplies category is highly competitive and is dominated by Amazon and Walmart. Competing with these major retailers is not a simple task, which may explain why in a very short period of time the office supplies market has gone through dramatic consolidation (Staples, Office Depot & OfficeMax). Ø Establishing and executing a competitive strategy is a key to succeeding in this highly competitive and volatile market. Ø Combining competitor price intelligence with internal sales, promotion and inventory data can help identify the areas that will drive demand and maximize gross margin. Ø Adopting a product lifecycle intelligence approach will uncover the different opportunities in every stage in the life of a product. Ø Retailers must invest in building a sustainable value that will be hard to beat and establish a brand reputation taking into account factors such as assortment relevance and availability as well as ease of purchase and speed of delivery. 13
Data Collection and Methodology Marketyze monitors on a real-time basis a comprehensive range of products in numerous categories across a selection of leading North American and European retailers. With a focus on best-selling products, we analyze price, promotion and assortment performance over different time periods and provide theses analyses to our clients via the Marketyze dashboard. Our clients can segment and view the data according to their internal needs, and are able to integrate the Marketyze competitive intelligence data with corporate data sets. This report provides an example of the types of data we monitor and analyze on a regular basis, which allows professional retailers to gain transparency into the office supplies market. All of the graphs and tables presented in this report have been taken from the Marketyze dashboard. Specific to this report Report period: Jan 21, 2015 - Feb 21, 2015 Categories: Office Supplies Printer Ink Copy & Printer Paper School Supplies Retailers covered in this report: Amazon.com, Walmart.com, Staples.com. Office Depot.com, Shoplet.com, BettyMills.com and OfficeSupply.com Update frequency: Daily Note: The data capture on which this report is based was performed across identical items that were all available online at each of the retailers during the report period, i.e., the exact same 1,462 office supply products were all available online during the report period at Walmart, Amazon, Staples and Office Depot and the exact same 1,315 items were compared across Shoplet.com, BettyMills.com, OfficeSupply.com and Amazon.com. 14
Additional Office Supply Categories Available Labels Flags and Dispensers Clipboards Postal Scales, Meters and Accessories Binders and Binding Supplies Highlighters Pricing, Pricing Systems and Supplies Copy and Multi-Purpose Paper Pens Easels and Easel Pads Fine Writing Instruments Paper Filing, Folders and Calculators Card Files and Binding Machines Accessories Accessories Label Makers and Dry Erase Boards Drafting and Art Files Desk Pads and Blotters Labeling Tapes Self-Stick Notes and Dispensers Scissors and Rulers Filing Boxes Overhead and Chart Markers Staplers, Staples and Clips, Push Pins and Shipping Tags Foam Boards Removers Fasteners Bulletin and Cork Boards Arts and Crafts Materials Correction Fluid and Rubber Bands Tape Specialty Paper and Laminators and Lecterns Poster Boards Card Stock Laminating Supplies Adhesives and Tapes Dispensers Drafting and Tracing Paper Chalk, Erasers and Cleaners Pad Holders and Briefcases Desktop and Drawer Business Cards Stencils and Stencil PA Equipment Organizers Supplies Pencils and Lead Refills Photo Paper Calendars and Wall Inkjet Paper Planners Paper Punches and Binding Machine Supplies Shipping Boxes and Specialty Markers Trimmers Mailing Tubes Pads Partition Accessories Presentation Boards Reference Books Envelopes Teaching Aids and Overhead Projectors and Erasers Classroom Equipment Transparencies Signs Desktop Sorters Color Paper Desktop Accessories Store Supplies Signs, Letters and Stamps Backpacks Message Boards Permanent Markers and Hanging Wall Files Certificate and Award Art Markers Marker Pens Supplies Forms Box Sealing Adding Machine and Calculator Paper Rolls Appointment Books, Planners and Refills Dry-Erase Markers Desk Trays Combination Boards Washable Art Markers Wide Format Printing Paper 15
About Marketyze Marketyze is a proprietary, enterprise-grade, competitive intelligence solution that is helping major retailers uncover margin opportunities every day Market Intelligence Inventory Optimization Merchandising Decision Support Rule-Based Pricing Key Features and Benefits: Ø Fully automated competitive pricing, product assortment and promotion intelligence Unprecedented matching accuracy Exact and similar product matching on refurbished, open box, or private label products Unlimited items, competitors, update frequency Supports multiple geographies and currencies Ø Fully integrated with business-critical processes Seamlessly incorporates sales, revenue, inventory, shipping information Define internal and competitive price rules to generate automated pricing recommendations Ø Business Intelligence Dashboard Real-time historical views by competitor, category, brand and item Identify market trends and obtain insights across your entire assortment A SaaS platform that is easy and fast to implement, with minimal IT involvement Partners Include: Questions about this report? Contact: 1.650.209.6610 info@marketyze.com To receive future category reports, please visit www.marketyze.com 16