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United Stationers- Office Supplies -
Category Directory
2200 East Golf Road
Des Plaines, Illinois 60016-1267
(847) 699-5000
www.unitedstationers.com
Sales
$3.8
billion
Business Description
SWith 2003 net sales of $3.8 billion, United Stationers Inc. ("United") is
North America's largest broad line wholesale distributor of business
products and a provider of marketing and logistics services to resellers.
United markets its products and services in the U.S., Canada and Mexico
through its United Stationers, Azerty and Lagasse divisions and
subsidiaries.
United was incorporated in 1981 under the laws of the State of Delaware.
United's operating company and its only direct wholly owned subsidiary is
United Stationers Supply Co. ("USSC"), which was incorporated in 1922 under
the laws of the State of Illinois. Except where the context otherwise
requires, the term "Company" refers to United and its consolidated
subsidiaries, including USSC.
Products
The Company distributes more than 40,000 stockkeeping units ("SKUs"), which
currently are classified into five categories:
Computer Consumables. The Company is one of the largest wholesale
distributors of computer supplies and peripherals in North America. It
offers almost 9,000 items to value-added computer resellers, office products
dealers, drug stores and grocery chains. Computer consumables accounted for
approximately 41% of the Company's 2003 net sales.
Traditional Office Products. Traditional office products accounted for
approximately 25% of the Company's net sales for 2003. The Company is the
largest national wholesale distributor of a broad line of office supplies,
including such items as writing instruments, paper products, organizers,
calendars and general office accessories. The Company offers approximately
20,000 brand-name products as well as its own private brand products.
Office Furniture. The Company is the largest national office furniture
wholesaler. It currently offers more than 4,000 items—such as leather
chairs, wooden and steel desks and computer furniture—from more than 60
different manufacturers. This product group accounted for approximately 11%
of the Company's 2003 net sales.
Janitorial/Sanitation Supplies. The Company is the largest national
wholesaler of janitorial and sanitation supplies in North America. It offers
over 5,000 items in these major categories: janitorial and sanitation
supplies, safety and security items, and shipping and mailing supplies.
Janitorial/Sanitation accounted for approximately 11% of the Company's net
sales during 2003.
Business Machines and Presentation Products. The Company is a leading
wholesale distributor of business machines—from calculators to telephones—as
well as presentation products and supplies. This product class accounted for
approximately 9% of the Company's 2003 net sales.
The remaining 3% of the Company's net sales for 2003 were derived from
miscellaneous revenue.
For more information on revenue by product category, see Note 4 to the
Consolidated Financial Statements included elsewhere in this Annual Report
on Form 10-K.
Customers
The Company's more than 15,000 customers include independent office products
dealers and contract stationers, national mega-dealers, office products
superstores, computer products resellers, office furniture dealers, mass
merchandisers, mail order companies, sanitary supply distributors, drug and
grocery store chains, and e-commerce merchants. Of its 15,000 customers, no
single customer accounted for more than 6.5% of the Company's net sales in
2003.
Independent resellers contributed about 80% of United's revenues in 2003.
The Company provides these customers with specialized services designed to
aid them in achieving efficiencies and eliminating costs in their overall
operations.
Marketing and Customer Support
The products distributed by the Company generally are available to its
customers at similar prices from many other sources. Most customers purchase
their products from more than one source. To differentiate itself from its
competition, the Company focuses its marketing efforts on providing
value-added services to resellers. These include product breadth and
in-stock availability, high-quality customer service, and national
distribution capabilities that enable same-day or overnight delivery.
United's marketing programs emphasize two other major components. First, the
Company produces an extensive array of catalogs for commercial dealers,
contract stationers and retail dealers. These catalogs usually are custom
printed with each reseller's name and then sold to these resellers who, in
turn, distribute the catalogs to their customers. Second, the Company
provides its resellers with a variety of dealer support and marketing
services. These services are designed to help resellers differentiate
themselves from their competitors by addressing the needs of the end-user's
procurement process.
Nearly all of the Company's 40,000 SKUs are sold through its comprehensive
annual general line catalog (available in both print and electronic
versions) and semi-annual specialty catalogs. Promotional catalogs are
typically produced quarterly.
The Company also produces separate quarterly flyers covering the majority of
its product categories, including Universal® private brand products.
Catalogs provide product exposure to end-consumers and generate demand;
therefore the Company tries to maximize the distribution of its catalogs by
offering various incentives to resellers, which resellers can use to offset
the cost of the catalogs.
Resellers can place orders with the Company through the Internet, by phone,
fax, e-mail and through a variety of electronic order entry systems. Use of
electronic order entry systems allow the reseller to forward its customers'
orders directly to the Company, resulting in the delivery of pre-sold
products to the reseller. In 2003, the Company received approximately 80% of
its orders electronically.
The Company employs a sales force of approximately 240 field salespeople,
160 tele-salespeople and approximately 400 customer care representatives in
support of its sales, marketing and customer service activities. The
Company's sales force tailors its service offerings to optimally serve the
customer's needs and reduce costs.
Distribution
USSC has a network of 35 business products regional distribution centers
located in 24 states. Most of these centers carry the Company's complete
offering of business products. The Company's 24 Lagasse distribution centers
carry a comprehensive line of janitorial and sanitation supplies. The
Company also operates two distribution centers in Mexico that serve computer
supply resellers and two Azerty distribution centers that serve the Canadian
marketplace. United's domestic operations account for $3.5 billion and its
foreign operations account for $0.3 billion of its total net sales of $3.8
billion.
The Company supplements its regional distribution centers with 20 local
distribution points throughout the United States, which serve as
re-distribution points for orders filled at the regional distribution
centers. The Company uses a dedicated fleet of more than 400 trucks, most of
which are contracted for by the Company, to enable direct delivery to
resellers from the regional distribution centers and local distribution
points.
The Company enhances its distribution capabilities through a proprietary
computerized inventory locator system. If a reseller places an order for an
item that is out of stock at the nearest distribution center, the system has
the capability to search for it at other nearby distribution centers. If the
item is available at another location, the system automatically forwards the
order back to the primary facility. The alternate location coordinates
shipping with the primary facility and, for the majority of resellers,
provides a single on-time delivery of all items. The system effectively
gives the Company added inventory support while minimizing working capital
requirements. This means the Company can provide higher service levels to
the reseller, reduce back orders and minimize time spent searching for
merchandise substitutes. All of these factors contribute to a high order
fill rate and efficient levels of inventory. In order to meet the Company's
delivery commitments and to maintain a high order fill rate, the Company
carries a significant amount of inventory, which contributes to its overall
working capital requirements.
The "wrap and label" program is another service the Company offers to its
resellers. This gives resellers the option to receive individually packaged
orders customized to meet the needs of their specific customer. For example,
when a reseller receives orders for several individual consumers, the
Company can group and wrap the orders separately, identifying each specific
consumer, so that the reseller need only deliver the already individualized
packages. Resellers like the "wrap and label" program because it eliminates
the need to break down bulk shipments and repackage orders before delivery.
Purchasing and Merchandising
As the largest wholesale business products distributor in North America, the
Company's merchandising strategy is to offer a broad product selection. The
Company obtains products from over 400 manufacturers. As a result of its
purchasing volume, United qualifies for substantial volume allowances and
can realize significant economies of scale in its logistics and distribution
activities. In 2003, the Company's largest supplier was Hewlett Packard,
representing approximately 24% of the Company's aggregate purchases. The
Company's centralized Merchandising Department is responsible for selecting,
purchasing and pricing merchandise as well as managing the entire supplier
relationship. Product selection is based upon end-user acceptance,
anticipated demand for the product and the manufacturer's total service,
price and product quality. The Company has recently introduced its Preferred
Supplier Program, which is designed to strengthen supplier relationships by
developing product category strategies to reduce overall supply chain costs.
Competition
The Company competes with office products manufacturers and with other
national, regional and specialty wholesalers of office products, office
furniture, computer consumables and janitorial and sanitation supplies. In
most cases, competition is based primarily upon net pricing, minimum order
quantity, speed of delivery, and value-added marketing and logistics
services.
United competes with manufacturers who often sell their products directly to
resellers and may offer lower prices. The Company believes it provides an
attractive alternative to manufacturer direct purchases by offering a
combination of value-added services, including 1) marketing and catalog
programs; 2) same-day and next-day delivery; 3) a broad line of business
products from multiple manufacturers on a "one-stop shop" basis; and 4)
lower minimum order quantities.
Competition with other wholesalers is based primarily on breadth of product
lines, availability of products, speed of delivery to resellers, order fill
rates, net pricing to resellers, and quality of marketing and other
value-added services. The Company competes with local and regional office
products wholesalers who typically offer limited product lines as well as
one national broad line office products competitor. In addition, the Company
competes with various national distributors of computer consumables.
Competition in the office products industry amplifies price awareness among
end users. As a result, purchasers of commodity office products appear
increasingly more price sensitive. The Company has addressed this by
emphasizing to resellers the continuing advantages of its value-added
services and competitive strengths (compared with those of manufacturers and
other wholesalers).
Employees
As of March 8, 2004, the Company employed approximately 5,700 people.
Management considers its relations with employees to be good. Approximately
800 of the shipping, warehouse and maintenance employees at certain of the
Company's Philadelphia, Baltimore, Los Angeles and New York City facilities
are covered by collective bargaining agreements. Agreements with employees
in Philadelphia and Los Angeles will expire on June 30, 2004 and August 31,
2004, respectively. The other agreements expire at various times during the
next three years. The Company has not experienced any work stoppages during
the past five years.
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United Stationers
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