When next-day delivery isn’t available from your wholesaler what do you do? If you’re Arctic Office Products, Anchorage, Alaska, you build up your own inventory so at least your own customers are always guaranteed next-day delivery.
“We carry everything from networked color copiers to systems furniture and supplies,” says Mari Wood, senior vice president. In addition to the main office and 25,000 sq. ft. warehouse in Anchorage, the dealership also maintains a small warehouse with a sales rep in Kenai and an office in Fairbanks with three sales reps. Anchorage functions as the distribution center for those locations.
Until this year, oil prices had been down for some time, which impacted the marketplace. “When oil prices are down here in Alaska we tend to be a little repressed,” says Wood. “That’s because the oil companies—and we have all of them up here—are not buying as much.”
During the most recent soft market, Arctic Office emphasized sales in other categories, primarily janitorial and breakroom. Sales remained flat but market share increased, largely at the expense of its big box competitors.
Last December, Arctic won the business from an oil transportation company that had been buying from Staples. “They are shocked that they can actually talk to people and that we help them find ways to buy the best products,” says Wood. This year, with oil prices increasing, business has started to pick up.
At any given time the dealership has almost $2 million in inventory spread out over 4,500 items. Resupply times from the wholesaler, even with a distribution center in Seattle, can take as long as ten days. By necessity 70 percent of inventory is purchased direct. Those direct purchases can take three or four weeks to arrive. Every product passes through Seattle on its way to Anchorage and from Seattle it takes a week by barge to reach Alaska.
Geography demands a different business model at Arctic than most dealers would work to. “We have to forecast what our sales are going to be on a direct basis almost a month in advance,” says Wood. “My flyers are planned three months in advance so we can get sale items on time and at the best prices.”
Competition has to deal with the same resupply challenges. When customers purchase online from a big box supplier, they wait up to two weeks for delivery. “When they place the order, they are told the item is in stock,” says Michael Richardson, sales and marketing manager. That just means it’s in stock at the nearest distribution center, which is in Seattle. “The big chains don’t stock a lot of product in Alaska and customers don’t like to wait two weeks for everything,” he adds. Even Amazon orders take up to two weeks to arrive.
Arctic has many long-term employees who understand all the complexities of doing business in Alaska. Big box competition doesn’t understand that distinction. “People in Prudhoe Bay have called Staples and been told their order would arrive by truck the next morning,” says Wood. “There is no truck that goes there in the morning.”
Richardson describes how one of his current missions is to take market share from the big box chains. He lets potential customers know a higher level of service, including next-day delivery, is available from Arctic. “Our competitors have no relationship with the customer anymore,” he says. They want everybody to talk to a call center and do all their business online. “People like to have the human touch, and that is something we can offer,” he adds.
Buying group consolidation is the current industry activity that Wood believes will have the biggest impact on independents. Arctic was an early TriMega member and Wood has pushed for the consolidation. “The merger will generate economies of scale that are going to make things more profitable for all dealers,” says Wood. “As independents we need to buy the best we can and this is going to help.”
Key management team members: William Borchardt, president & owner; Mari Wood/Supplies; Lori McVay/Copiers and Rudy Borchardt/Furniture
Products carried: Furniture, Copiers/Printers, Supplies, Breakroom/Janitorial
Year founded: 1946
No of Employees: 86
Key business partners:
TriMega, Canon, HP, HON, Domtar, Humanscale and
% of total sales generated online: 46%