United Stationers heads into a new digital world under a new name: Essendant
February 23, 2015 02:03 PM
The past week was a big one for distributor United Stationers Inc.
It reported on Tuesday that its fourth quarter 2014 online sales grew 15% year over year—bringing Q4 online sales to about $133 million, and full-year online sales to more than $500 million, or 10% of total sales. Then on Wednesday the distributor of office products, janitorial supplies and industrial products kicked off a new digital strategy designed to strengthen its position—and that of its thousands of wholesale-reseller customers—in an increasingly online world. To top things off, it said it was changing its name to Essendant to better reflect the scope of its business, which, out of a market-driven necessity, increasingly must go beyond office products.
At its annual corporate event for its customers and suppliers last week, Emerge CORE Live, CEO P. Cody Phipps and other United Stationers executives outlined a new strategy for the next few years that includes a new system designed to make it easier and faster for its wholesale customers to place and receive orders. When he announced the name change—a move many customers and suppliers expected, though the new name itself had been a closely held secret—Phipps explained that the Essendant corporate name and brand better reflects the breadth of its essential workplace product lines and its goal to help wholesalers and resellers ascend to greater heights of business. The official switch to Essendant will occur in June. (The term CORE stands for Center of Reseller Excellence.)
Phipps went on to say that the company was taking several steps to address the challenges posed by its industry’s “massive shift to online,” including the rapidly increasing use of Internet-connected mobile devices and Internet-based services in the workplace; more younger buyers accustomed to purchasing online through Amazon.com and other web sites; and the growing expectations of online B2B buyers for quick and easy retail-like shopping features for a broad range of products.
“You have to change, you have to move forward,” Phipps said to several hundred Emerge CORE Live attendees who had braved an ice storm to reach the event in Nashville.
At the core of the company’s new strategy—the initial phase of which will coincide with the name change to
Essendant in June and run through the first half of next year—will be a $19 million upgrade of the company’s online technology that its customers use to order products from its office products divisions, United Stationers Supply Co., or USSCo, and janitorial /sanitary/food service products from another, LagasseSweet.Working on a mix ofin-house online technology, a Yantra order management system (now part of IBM Corp.’s IBM Order Management software) and demand-planning technology from Manhattan Associates, the company plans to upgrade its online platform to let customers begin ordering from both its office products and janitorial/sanitation divisions on ordering single platform. The new platform will replace a system that requires customers to log on separately to the USSCo and LagasseSweet sites to place orders. Starting in 2016, the company expects the new platform to provide $15 million to $20 million in annual costs savings, Phipps said during a recent conference call with stock analysts.
Eventually, United Stationers also plans to make available on the same online platform products from its other divisions, including power tools and related products from MEDCO and CPO Commerce, welding tools and oilfield safety equipment from ORS Nasco and computer hardware and accessories from Azerty. CPO Commerce, which United Stationers acquired last year, differs from other divisions in that it sells to consumers as well as businesses.
By using the common Essendant brand across its divisions along with a single online ordering platform, Phipps says, the company will be able to more easily broaden its sales across its multiple categories.
That process of supporting sales across multiple categories has already started in a revised strategy that began last year among the company’s sales reps and network of 77 distribution centers. Sales reps for janitorial products in the LagasseSweet division, for example, have started sharing information on products with their colleagues in the United Stationers’ office products division, enabling reps in each division to sell across the two divisions.
At the same time, the company has been changing how its customers can get orders fulfilled from its warehouses—a move that has helped a major United Stationers supplier, The Clorox Co., increase sales through the distributor by some 31% in the past year, says Ron Grella, the manufacturer’s national accounts manager and office channel team manager.
Grella, who was manning a Clorox exhibit (one of some 160 vendor exhibits) at the Emerge CORE Live show, said United Stationers has modified its fulfillment policy to let its wholesalers and resellers order either in cases or in single units from both the USSCo office products division and the LagasseSweet division. That has helped to push up Clorox’s combined sales across these categories by letting some companies buy in single units to test new products, while letting others beef up sales by ordering in bigger quantities, he said.
For the fourth quarter ended Dec. 31, United Stationers reported:
● Online sales of $133.08 million, up 15.0% from $115.72 million a year earlier;
● Total net sales of $1.333 billion, up 8.9% from $1.224 billion;
● Net income of $25.84 million, down 24.3% from $34.13 million. (The $8.29 million drop in net income coincided with a nearly equal amount of $8.23 million for an accounting charge related to the sale of the company’s MBS Dev software unit.)
The company reported for the full year ended Dec. 31:
● Total online sales of $532.72 million, or 10% of total sales;
● Total net sales of $5.327 billion, up 4.8% from $5.085 billion a year earlier;
● Net income of $119.198 million, down 3.2% from $123.170.
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