OfficeMax, Inc., the number three office supply superstore, (NYSE: OMX) announced Friday that it launched international Web sites in Japan and Mexico. This expansion comes on the heels of the company’s recent success in domestic U.S. e-commerce efforts.
Both sites use the native language of the host countries, and the Shaker Heights, Ohio retailer also said it plans to launch a third e-commerce Web site in Portuguese — for Brazil — in the coming year. The sites will offer more than 4,000 products targeted towards small-to-medium sized businesses.
OfficeMax.com — the company’s domestic site — is the No. 1 office product Web site (based on eyeball counts) according to Media Metrix, an Internet and digital rating company. This is one of the factors that sparked OfficeMax’s decision to expand its cyberspace presence to other countries.
“These International Web site launches exemplify OfficeMax and its joint venture partners’ dedication to becoming the No. 1 destination in Cyberspace for customers around the world shopping for office supplies,” said Michael Feuer, OfficeMax’s chairman and chief executive officer.
Sagging computer sales
Yet another factor driving OfficeMax’s foray into international markets, industry experts say, could be the sagging computer sales in its 870 brick-and-mortar stores.
OfficeMax’s last quarterly report showed that its computer sales had plummeted 27 percent during the first 13 weeks of 1999, to $67.8 million (US$), compared with $92.8 million for the same period last year. In addition to lower computer sales, OfficeMax also reported a loss of $11.4 990623 million on that segment of its business in the first 13 weeks of this year, compared to a loss of $12.5 million the previous year’s first quarter. This could be one reason OfficeMax is partnering with America Online in a promotion offering a $400 computer rebate for customers who sign a three-year CompuServe contract.
But despite its soft computer sales, overall, OfficeMax profits have been robust. It earned 22 million on $1.2 billion in revenue for its first quarter. This is partly due to the burgeoning sales of its higher-margin products via the Internet.
In fact, a consensus of 16 Wall Street analysts who follow OfficeMax, estimate that its growth will skyrocket 146.2 percent in 2000, according to Multex.com, Inc. The analysts also predict that the company will see a growth rate that is “stronger than the rate of growth anticipated for the broad market in 2000.”
Competition is fierce
Regardless of the rosy forecast, however, OfficeMax faces formidable competition.
Office Depot and Staples both have an established presence in Cyberspace. In addition, the giant Dutch office products company Buhrmann, NV announced just last week that it had agreed to buy Broomfield, Colorado-based Corporate Express, Inc. for $2.3 billion (US$).
“We will capitalize on the innovation and sales distribution strengths of the two companies, while expanding our rapidly growing e-commerce business and providing world-class customer service and quality,” said Frans Koffrie, Buhrmann’s chief executive officer.
Analysts say this and other mergers will soon make the international e-commerce arena another hotbed for vigorous world-wide competition.