Monica Luechtefeld Makes the Net Click

The dedicated veteran behind OfficeDepot.com has built one of the largest retailers on the Web — a $2 billion-a-year site that has been profitable from the start.

It is a busy Saturday at one of Office Depot's Boca Raton retail stores. The staff is hustling during the back-to-school season to match middle schoolers with backpacks and college students with graphing calculators. Salesclerk Monica Luechtefeld, crisply professional in a red Office Depot polo shirt and black pants, draws a particularly thorny request from a young customer.

The teenage boy desperately wants to buy a computer and a monitor with the money that he has earned during the summer. Trouble is, he has only about $500 — not quite enough even for a low-end off-the-rack system. But Luechtefeld, a mother herself, can't bear the thought of sending the kid home empty-handed. So she marches him right over to a computer kiosk near the front of the store, clicks around the Office Depot Web site displayed on the screen, and presto! — just like that, she manages to find a reconditioned 1.5-GHz Hewlett-Packard computer, complete with warranty, for $499. A few more clicks, and she discovers a refurbished monitor that was originally priced at $179.99 but that now features a $150 mail-in rebate, for a grand total of $29.99.

Even the store manager is astonished. But Luechtefeld, who is working there as part of a companywide executives-in-the-field program, isn't completely satisfied. The search wasn't as seamless as she'd expected. There were a few things that could have tripped up less Web-savvy searchers. Most disturbing, her fellow sales associates seemed only dimly aware of the vast virtual inventory available through the site. She vows to make it right.

By Monday, Luechtefeld, dressed in a stylish black St. John's knit suit, is back at her real job as e-commerce chief of Office Depot (annual revenue: $11 billion), based in Delray Beach, Florida. She has a fistful of notes for her tech team. "When I came back, I told the IT guys, 'This is your worst nightmare, having me use the tools inside the store,' " she says, laughing.

Present at the Creation
Meet one of the fearless mavericks of e-commerce. Monica Luechtefeld has been directing online initiatives for Office Depot since 1994, when she embarked on a joint project with MIT to develop a business-to-business Web site for ordering office supplies. That was the equivalent of the early Bronze Age of the Internet, when few people aside from hard-core techies and members of academia had even heard of the Web. But Luechtefeld was excited by the opportunity, inspired by the vision of Web pioneers like Tim Berners-Lee, and determined to position Office Depot at the forefront of the revolution. "Although most companies didn't see it yet, I really thought that this kind of technology was going to be a home run for corporate America in automating routine transactions for suppliers," Luechtefeld says.

Eight years later, her blend of spirited evangelism and results-oriented execution has produced an e-commerce grand slam. In 2001, Office Depot's worldwide e-commerce sales broke the billion-dollar threshold, topping off at $1.6 billion — 14% of total sales. That makes Office Depot the second-largest multichannel retailer on the Web, trailing only Amazon.com, and puts the office-supply store some $650 million ahead of Staples, its nearest competitor. The company's recently announced partnership with Amazon, which will improve its access to individual — as opposed to corporate — shoppers (a market that Luechtefeld estimates at more than $90 billion), means that Office Depot is likely to reach chairman and CEO Bruce Nelson's goal of $2 billion in online sales this year without breaking a sweat.

What's even more remarkable than this track record of growth is Office Depot's seven-year track record of profitability. The company's site has made money since its first year of operation. There was never starry-eyed talk of reckless spending in an attempt to attract eyeballs, increase stickiness, or monetize traffic. "From day one, it was all about the sale," Luechtefeld says. "You had to have initiative and vision, but you also had to figure out how to make it work in the real world and make real money."

The company also decided early on that the Web site would not be a stand-alone venture, Luechtefeld says, but a front door into all of Office Depot's other sales channels. "We've always viewed the Web as an enabler to doing business as opposed to a discreet channel," says Robert Keller, president of business services.

That meant a no-silo strategy: At launch, the online division was integrated into the company's back-end systems, organization chart, and business planning. Web-based transactions were also built into compensation plans for the sales force, instantly heading off squabbling over who would get credit for which orders. "From an internal-accounting point of view, it didn't matter to us whether the order originated over the phone or online," Luechtefeld says. "So we weren't pulling sales from one channel to another. We were letting the customer choose." Now some 60% of Office Depot's corporate customers do their business on the Web, and CEO Nelson predicts that that number will climb to 80% in the next three to four years.

The Long Road to Internet Glory
As refreshingly commonsense as Luechtefeld's strategies seem today, it wasn't always so. Indeed, she recalls the rocky transition from the early promise of the MIT site to the point where corporate America finally embraced the technology as a lonely slog through a clueless landscape. "It took two long years to get our first 500 customers connected," Luechtefeld says. During that time, she traveled relentlessly in a grassroots effort to sell her vision of how the Web would change how business worked. It was often an uphill battle. "We used to do training at corporations where 60% of the people in the classes had never touched a mouse," she says.

Keller recalls one meeting with 100 Fortune 500 customers that he and Luechtefeld had in 1998. He began by asking how many of the customers were buying on the Web. Four people raised their hands. Then he asked, "How many are thinking about doing it?" About 20 hands went up. Finally, exasperated, he asked, "How many people know what we're talking about here?" Less than half of the audience weakly waved back.

While those were trying times in the business, they were also grueling ones for Luechtefeld personally. A California native, she joined the company in 1993, when Office Depot acquired Eastman, the West Coast's leading contract office supplier, where she had been vice president. For several years, she ran the chain's southern California operations but was persuaded to move to headquarters in 1996 to handle marketing and new-business development and to oversee the development of the MIT site.

Reluctant to uproot her son, Christopher, who was a high-school senior, Luechtefeld let him stay behind with his father. For a year and a half, she spent her weeks in Delray, then hopped a flight on Friday night to spend her weekends in Valencia, California. "It was an ordeal," she says, "but it was worth it."

In 1997, Office Depot's planned merger with Staples was quashed by the FTC. The setback rattled the company, which had slowed its expansion pending the completion of the transaction. Suddenly, says Michael Kirschner, a VP in the IT business-services group, there was huge pressure to build a public Web site — and soon. That was in October. By January 15, 1998, after more than three months of nonstop work and barely a pause for Christmas, OfficeDepot.com went live. Within a few months, Kirschner says, the site had logged its first million-dollar day.

Soon after, Keller stripped Luechtefeld of all non-Web-related duties. She was furious. "I took everything else away," Keller admits. "She was really honked at me. But e-commerce was more than a full-time job."

These days, Luechtefeld's 12-hour days leave little time for boredom. In addition to shepherding the Amazon deal, she has launched two special-interest Web sites: School.com for educational supplies and JanitationDepot.com for janitorial cleaning supplies. In 2001, she negotiated a deal to acquire 4Sure.com, an online computer-networking and software reseller, adding some 65,000 technology products to Office Depot's virtual inventory — and giving the company a significant leg up on its competitors in the office-supply space. That same year, she struck a partnership deal with Microsoft to offer bCentral Web-based services on the Office Depot site.

Luechtefeld is currently working with colleague Jerry Colley, president of North American stores, to test potential in-store technology services, including kiosks and wireless devices. And she has ambitious plans to build an online businesswomen's network and to launch a Web site for the Hispanic marketplace.

Looking back, Luechtefeld credits her parents with planting the seeds that powered her pioneering spirit. "My mother always said, 'You can be anything, you can do anything,' and my father always told me, 'Figure it out.' I think those two scripts really helped me take risks and go where there was no road."

Asked what message he got from his mother, Luechtefeld's son, now a broker at Morgan Stanley in Los Angeles, says, "She always told me, 'Why not?' "

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Virtual Sales, Real Experience
Monica Luechtefeld isn't the only Office Depot executive to experience firsthand what it feels like to work on the company's front lines. Two years ago, when Bruce Nelson took over as CEO, store sales were sluggish and employees were still dispirited from the company's failed merger with Staples.

To get his executive team in closer touch with the company's far-flung retail empire, Nelson instituted a program that would send managers — including the CEO himself — to work in the stores one day per quarter. The insights from that program are shared in Monday-morning executive meetings and used to make improvements in everything from the company's Web site to its sales-force training. The first year that Nelson staffed the stores, he got an earful of complaints. "People told me that this wasn't the most compelling place to work," he says. Two years later, the reviews are more positive, and he spends his tour of duty picking up on ideas for running the stores — and the company — better. "People tell me things that are important to them that I never would have thought about," he says.

Meanwhile, other top executives have discovered their inner sales associate. Last year during his stint in the field, Robert Keller, president of business services, helped an elderly customer buy a lamp. At the end of the sale, she turned around and asked him, "How long have you been working in this store?" "Actually, ma'am," he said, "this is my first day." "Well," she said, "you're getting a pretty late start in life on this. But I think you've got a career in sales."

Linda Tischler (ltischler@fastcompany. com) is a Fast Company senior writer. Contact Monica Luechtefeld by email (mluechtefeld@officedepot.com).

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