Q & A An interview with Jeanne Lewis, president of Staples.com, the e-commerce arm of Staples Inc.
Darwin: Staples.com launched in November 1998, 10 months after Office Depot's website went live. Was it hard playing catch-up?
Jeanne Lewis: Staples.com came at the perfect time. We had seen other competitors launch, and we learned from them. If you look at small business overall, it's roughly a third, I think, of purchasing online. We launched in November 1998, so we're certainly right in the sweet spot, the beginning of the wave, and yet we were able to look around and see what others had done, where we did and didn't want to go. I think our timing was actually terrific.
What are the benefits of starting an online business in an established brick-and-mortar company? The challenges?
The benefits are many. We have a huge advantage at Staples.com over pure plays in that we've got a brand with high national recognition. We have buying power for the product that we sell, and we get to ride on the coattails of a $9 billion company. Unlike a lot of other Internet executives, I don't stay up at night worrying about billing, distribution and delivery because it's there. When we launched our catalog in 1989 at Staples Inc., that launched [us into] the direct marketing and delivery business. As a result, Staples.com is leveraging over a decade's worth of infrastructure that just keeps growing and getting better.
We also have, across the enterprise, expertise in direct marketing. I think one of the names of the game in the Internet is direct marketing. So we have a huge advantage there.
As for challenges, generally the biggest hurdle that most companies need to get over is cannibalization. We went through the cannibalization fire drill in 1989, when, on top of growing thriving basic retail stores, we introduced a catalog business, another way to shop. So what happens when you have retail customers who find out you have a catalog business [and vice versa]? The answer unanimously is that they will spend more. We proved what now seems obvious to us, which is customers spend more with Staples. They're happier, they stay longer. We can just give them another way to shop; it's all about customer choice.
More of a challenge were the free cookies, beverages, pool table and foosball [located in the Staples.com work space]. Those were in many ways unknown to the core business. We worked our way through it, but it was a cultural difference [between Staples Inc. and Staples.com] that I think took us all by surprise. Both groups can eat the cookies and play with the toys. That's what I always remind them. And they do.
How have you had to adjust your management style in going from Staples Inc. to Staples.com?
The rapid-fire decision making needed to run a dotcom venture requires a different management touch. For example, our open-space plan is a great example of that. I look at cubicles as tools. I don't look at them as funky workspaces. The cubicle is a tool for faster, better communication that actually results in quicker decisions.
I'll give you a real example: I ran global marketing and advertising [at Staples Inc.] before coming to Staples.com. Then I ran Staples.com for the first three months in a normal, conventional work space. By the time I got home every night, I had cleared through anywhere from 30 to 50 voice mails a day.
Since our move to cubicles, I now consider getting a dozen voice mails a bad day. And I can assure you that 99 percent of the voice mails that I get are from people from the outside. The people I work with at Staples.com don't leave me voice mails-the difference is we talk face-to-face. There is none of this back and forth. Decisions are made, and we move. That for me required a retooling of my idea of where a manager sits-office versus cubicle.
I think a different series of management tactics are well suited to this space. It may or may not work in an offline business. I'm not recommending cubicles to everybody, but certainly, I think in this space, people should think about it. I think this is why Meg Whitman [president and CEO] at eBay Inc. is so enamored with the idea of cubicles. It works.