Staples 2004 Annual Report Download - page 63

We also believe that there is an opportunity to sell office products through other retail channels and are testing this
approach with certain grocery store chains, where we feature a high percentage of Staples brand products. This initiative
is designed to capture incremental sales from customers we are not currently serving while strengthening our brand.
North American Delivery
Our North American Delivery segment is comprised of three business units: ‘‘Staples Business Delivery,’’ ‘‘Quill
Corporation,’’ and our Contract business, operating under the names ‘‘Staples National Advantage’’ and ‘‘Staples
Business Advantage.’’ In 2004, Staples Business Advantage broadened its focus to include customers with 20 to 50
employees that were previously targeted by Staples Business Delivery because we found that these customers demanded
selling features such as payment terms and better pricing that we could more effectively offer through Staples Business
Advantage. We have successfully redeployed our Staples Business Delivery sales force into the Staples Business
Advantage sales organization to better serve these customers.
Staples Business Delivery: Our Staples Business Delivery operations combine the efforts of our direct mail catalog
business, operating since 1990, and our Staples.com web site and Canadian Internet sites. Staples Business Delivery is
designed to reach small businesses (less than 20 employees) and home offices, offering next business day delivery for
most orders. Our Internet sites provide complete, on-site transaction processing for the purchase of over 40,000 office
products and services. We market Staples Business Delivery through direct mail catalogs, a telesales group generating
new accounts and penetrating existing accounts, and Internet and other broad-based media advertising.
Quill Corporation: Founded in 1956 and acquired by Staples in May 1998, Quill is a direct mail catalog business
with a targeted approach to servicing the business product needs of approximately one million small- and medium-sized
businesses in the United States. Quill also sells office products using the Internet channel through Quill.com. To attract
and retain its customers, Quill offers outstanding customer service, Quill brand products and special services. In 2002, we
acquired Medical Arts Press, Inc., or MAP, a leading direct marketer of specialized printed office products and practice-
related supplies to medical offices, and established MAP as an operating division of Quill.
Staples National Advantage and Staples Business Advantage: Our Contract operations focus primarily on serving the
needs of medium-sized to large businesses that often require more service than is provided by a traditional retail or mail
order business. Through our Contract sales force, we offer customized pricing, payment terms, usage reporting, the
stocking of certain proprietary items and full service account management. Our Contract business is divided into two
segments: Staples National Advantage is a nationwide Contract business selling to large multi-regional businesses.
Staples Business Advantage primarily sells to medium-sized and large regional companies. We initially established the
Contract business through acquisitions, and since that time have entered certain metropolitan markets through the
expanded sales and distribution capabilities of Staples Business Advantage. StaplesLink.com, which offers the highest
level of procurement functionality available on our web sites, meets the online procurement needs of our Contract
customers.
Our strategies for North American Delivery focus on customer service and customer acquisition and retention to
grow our delivery business and increase its profitability. We continue to focus on improving our perfect order metric,
which measures the number of orders that we fulfill on time and without error. In 2003, we implemented our easy returns
policy, which provides customers with a more flexible and simple returns process. We developed and implemented
customer service standards to improve recovery of service failures and to make it easy for customers to resolve any issues
with their orders. We are also working to enhance our distribution capabilities by increasing the number of multi-channel
fulfillment centers and reducing the number of single channel facilities, and these efforts have enhanced our ability to
provide next day delivery to more markets. We continue to expand our sales force as we increase our market share and
drive penetration of existing customers, and we have provided better training and improved the tools and offerings of our
sales force to help increase customer retention. In addition, we worked to drive profitability by increasing our customers’
average order size and the percentage of orders placed electronically.
International Operations
Our International Operations consist of retail stores, and catalog and Internet businesses operating under various
names in 18 countries in Europe and South America. In addition, we operate in Asia through our equity investment in
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