business news in context, analysis with attitude

We've gotten a number of emails about the judge's decision to block the Staples acquisition of Office Depot, which I though flew in the face of modern competitive reality, which is that one of the two is likely to go bankrupt because of an inability to compete effectively with online retailers.

One MNB user responded:

I have been reading and enjoying MNB for a long time… but this time you and many in the media have got this decision all wrong… both Staples and Office Depot / OfficeMax have been building large and viable B2B businesses that utilize thousands of highly trained “on line” sales personnel… this shift started over five years ago and is based on utilizing state of the art technology to train, equip and manage these B2B sales personnel… fact is they sell significantly more on line and via B2B than by traditional Brick and Mortar retail sales…

Both organization know that their brick and mortar business has been and will continue its steady decline…their future is being built on a sophisticated direct to the buyer / decision maker model…  fact is their B2B direct sales business has been larger than their on line consumer business (that competes with the likes of Amazon) for several years…  

Both companies depend on these sophisticated sales teams to sell billions of dollars of profitable technology, business services and office furniture and equipment…. Merging these companies would have impaired both their “on line” and direct competition and cost thousands of jobs at each of the companies as well as at their suppliers… not to mention the billions of dollars of duplicate inventory sent and credited back to the suppliers… something the FDM channels know all too well…

The only ones benefiting from this deal were highly leveraged Hedge and PE firms and a small group of corporate shareholders… while I am not a fan of government intervention in the private sector this time they did get it right… despite what the headlines might indicate… in the era of ZIRP and cheap money not all mergers make sense…

And, from another reader:

I have enjoyed your daily for years however this is the first time I have felt compelled to respond to one of your pieces.

I completely understand your argument that there is indeed competition in the online space for Office Depot and Staples in Amazon, and based on that this merger should have been allowed.
However I believe that in the current environment the Brick and Mortar space and Online space need to be considered separately as it relates to monopoly consideration.

With that I completely agree with your perspective that there is a long list of regulators who do not understand the online space, if they did Amazon would not be allowed to exist as it is today and continue to grow.

Keep in mind I stated the Online Space should be considered separately from the Brick and Mortar space for this purpose.

Given that, Amazon is clearly creating an environment where NO-ONE else can compete in the space.

Even the retailing behemoths who have supply lines that are comparable to Amazon cannot compete.
Anyone who does not believe that Amazon’s Jeff Bezos intent is to monopolize all things online is naïve.

I am not denying they are a great customer service based organization or that their rate of innovation is astounding or that they do not deserve their rapid rise as one of the biggest retailers in the world.

I just believe we need to be careful to not allow them to become the only online retailer.

The other day, I wrote about a new Walmart online tactic with the headline, "Walmart Primes E-Commerce Pump With Two-Day Shipping Service."

Which prompted MNB reader David Hegle to write:

From the turns-of-phrase department, my pattern-searching subroutine has noticed this:
1/15: Priming The Pump For Consumer Loyalty
1/28: Amazon Continues To Prime The Sales Pump
4/2: Postmates Looks To Prime The Profit Pump With Subscription Service
5/12: Walmart Primes E-Commerce Pump With Two-Day Shipping Service
Couldn’t find any headline examples before this year, so I think it’s a 2016 trend...

You're right. It is time for me to retire that phrase. Or maybe kill it entirely. Though I cannot promise that at 5:30 in the morning at some point, I won't forget and use it again.

But I'll try not to.
KC's View: