Quill Corporation

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Quill Corporation

100 Schelter Road
Lincolnshire, Illinois 60069-3621
U.S.A.
(847) 634-6650
Fax: (847) 634-5816
Web site: http://www.quillcorp.com

Division of Staples, Inc.
Incorporated : 1956 as Quill Office Supply Company
Employees : 1,300
Sales : $600 million (1998 est.)
NAIC : 45321 Office Supplies & Stationery Stores; 454110 Mail-Order Houses

Quill Corporation is the largest and most successful direct marketer of office products in the United States. The company markets and sells an ever increasing number (approximately 15,000 at last count) of office supplies, including such items as file folders, calendars, computers, copiers, tax forms, storage boxes, file cabinets, fax paper, office furniture, and classroom and janitorial supplies. All of the company’s products are sold at significantly discounted prices to schools, businesses, associations, institutions, and medical and professional offices throughout the United States. What is most unique about Quill Corporation is its ability to market and sell its products through a highly sophisticated system of print and electronic catalogues, supplemented by phone, fax, and web site sales support. In fact, Quill Corporation’s web site has been ranked the number one office supplies web site, utilizing what is widely regarded within the industry as the most convenient and efficient online ordering system in the country.

Early History

Quill Corporation was the outgrowth of an idea by Jack Miller. Miller grew up on the north side of Chicago during the years when the city was still a strong mix of Eastern European ethnic groups. His father sold live poultry in a predominantly Polish-speaking area of the town, and became a successful small businessman through his efforts. Jack was pushed by his parents to attend college and, after graduating from the University of Illinois, the young man took a job as a door-to-door salesman of briefcases. By 1956 he had grown tired of peddling briefcases and started his own office supply business. Working out of a room near his father’s poultry business, Jack sold office supplies to small firms throughout Chicago’s north side. Lacking retail experience, the young entrepreneur relied on his door-to-door selling technique, and when customers phoned they would normally hear chickens squawking in the background as their orders were being taken.

By the end of his first month in business, Jack Miller had sold a mere $960 worth of office supplies. Nonetheless, he remained undeterred and was convinced that he could build a viable as well as profitable office supply business. Over the next year, the company grew steadily but slowly and, by the time his brother Harvey joined him in the business, the two men were able to pay themselves a salary of $90 per week. As the business continued to grow, the two brothers divided Chicago into halves, with Jack making calls to firms on the north side and Harvey making calls to firms located on the south side of the city. At the same time, they were able to move out of their father’s poultry store and into their uncle Herb’s basement, which served as their first office and warehouse.

By 1958 Quill Office Supply Company, named because of the original connection to the poultry store, moved once again into a more spacious 850-square-foot storefront, and then again in 1960 to an even larger warehouse and office space. The impetus behind the company’s expansion was Jack and Harvey’s original idea to send postcards and then fliers to current and potential customers notifying them of discounted office merchandise for sale. This method of selling office supplies, one of the first direct mail efforts in the industry, worked so well that the two men were soon spending more time on the phone filling orders than out selling their products door-to-door. The next step was a natural one. The Miller brothers glued together their first mail-order pamphlet complete with cut-out pictures from wholesale books, reduced their prices by 15 percent, offered to sell their supplies in bulk quantities direct from the manufacturer, and provided free delivery to all their customers. By 1963 Quill Corporation had transformed itself into one of the first mail-order-only companies in the United States and, not surprisingly, celebrated by introducing its first big catalogue.

With such overwhelming success, the Miller brothers decided to arrange for a bank loan in order to finance a major expansion plan. A large portion of this money was used to purchase a two-story building that served as a new office and warehouse for the firm. Unfortunately, the company grew more slowly than expected, and repaying the loan turned out to be much more difficult than anticipated. When the loan was finally repaid, Jack and Harvey, who were now acting as president and treasurer, respectively, decided that any future expansion plans would be financed out of the company’s profits and determined by its cash flow. This decision led the two men to examine Quill’s operations and implement a policy that created a positive cash flow by turning over the company’s receivables in less than one month and its inventory no less than ten times per year.

Growth and Expansion During the 1970s and 1980s

In 1974 Quill reported annual sales of $3.5 million. Arnold Miller, cognizant of the need to help his brothers Jack and Harvey, and perhaps even guilty of spending many years apart from his family working as a certified public accountant in California, joined the family business as secretary. At first, the three brothers shared the responsibility of decision-making for the company. As the firm grew, however, the responsibility and duties of each brother needed to be clearly delineated. Jack chose marketing, Harvey decided on operations, and Arnold volunteered to supervise the company’s finances. The triumvirate worked well, and the company grew rapidly. As with any other organization, disagreement among the principals was nonetheless commonplace. In order to deal with the more divisive issues, a policy was implemented such that if all three of the brothers disagreed on a particular course of action then it was not undertaken.

Still, the best was yet to come for Quill Corporation. During the early and mid-1990s, the company’s revenues skyrocketed, amounting to $180 million in 1986. Its mail-order business was the most successful within the office supplies market, with more than 40 million catalogues and flyers sent to a customer base of approximately 600,000 businesses and organizations, and listing more than 9,000 various office supplies and products. With business booming, the company’s number of employees rose to over 850, providing some of the best customer service in the industry. During the entire decade of the 1980s, Quill Corporation made a commitment to numerous mailings of its catalogue and flyers each year—60 million pieces annually on average—since Jack Miller was well aware of the fact that keeping customers constantly aware of its deep discounts was the only way to maintain a customer base that had little loyalty to office supply companies.

At the same time, however, a new and highly innovative breed of discount office supply warehouses arrived on the scene. The most successful and largest of the new deep-discount office supply firms was Office Depot, a company whose revenues by the mid-1980s had catapulted to over $300 million, surpassing Quill Corporation not only in sales but also in direct mail-order volume. With 80 stores in 15 states, Office Depot soon developed a reputation as one of the most aggressive discount price firms in the industry. While Quill sold its own brand of copy paper for $37.90 per case, Office Depot sold it for a little over $20. Other deep-discount office supply stores, such as BizMart, Office Club, and Staples, followed Office Depot’s lead, and by the late 1980s Quill Corporation’s growth in certain geographical markets had ground to a complete halt.

The Miller brothers were not the kind of businessmen to lose ground without a fight, so they went on the offensive. Jack Miller directed the campaign to regain the markets Quill had lost, and began with customer service. He focused on the training of pleasant telephone operators, whom he recognized as the company’s front-line sales force. He strategically increased the number of targeted mailings to prospective customers, and introduced a new policy that guaranteed delivery of all company products within three to five days. Most importantly, Jack Miller focused on improving prices across the board. Under his direction, the company not only slashed prices for all its office supplies, but also streamlined and simplified its pricing strategy. By 1989 Quill Corporation was able to lower its prices for all products by nearly 15 percent, thereby reducing the firm’s gross margins on average to a still healthy 30 percent. As a result, despite the competition from such firms as Office Depot and Staples, Quill Corporation continued to grow and prosper.

The 1990s and Beyond

During the early and mid-1990s, Quill Corporation remained under the direction of the Miller brothers. Confident of their ability to compete with the deep-discount office supply firms, the Miller brothers decided to make a foray into the retail store market and acquired Aaron’s Office Furniture Warehouse, a small operation with five stores located in the Chicago metropolitan area. Jack Miller managed to successfully expand the operations of Office Furniture Warehouse, renamed Quill’s Office Furniture, during the early years of the 1990s, and even opened another store by the end of fiscal 1994. Another strategic expansion involved the growth of the company’s product line, when in 1995 the Miller brothers decided to carry a wide range of school supplies, such as crayons, rulers, audiovisual equipment, erasers, and other items to meet the needs of primary, secondary, and vocational students.

Company Perspectives

By giving our customers uncompromisingly outstanding satisfaction, by being a great marketer of products to business and by operating at the highest degree of efficiency, we will achieve significant growth in sales and profitability. We take great pride in everything we do.

Much of the company’s growth during these years was due to the result of an extremely important case heard before the U.S. Supreme Court. The state government of North Dakota had brought suit against Quill Corporation in order to force the out-of-state mail-order company to require that in-state customers pay taxes on their purchases. The litigation surrounding the case continued for a number of years and then, finally, the Supreme Court decided in favor of Quill Corporation. The majority opinion maintained that the North Dakota state government could not require the firm to collect taxes from in-state customers since Quill Corporation did not have any employees or retail stores located in the state. Customers flocked to buy Quill’s products since they did not have to pay taxes on the purchases. Consequently, the Miller brothers decided to improve and upgrade their catalogue business, while selling off the office furniture stores purchased a few years earlier.

Then, without much warning or notice, the Millers decided to sell Quill Corporation to Staples, Inc., one of their traditional competitors, in the winter of 1998. All of the brothers were growing older, with Jack Miller set to celebrate his 69th birthday during the year. Many of the company’s employees were taken by surprise, as well as industry analysts and other people working in the office supply products industry. According to Jack Miller, the three brothers had wanted to keep the operation a family business; however, there was not one member of the younger generation within the family who was willing to assume the responsibilities and duties necessary to maintain the company’s success. In addition, the Miller brothers could not find a suitable candidate from the outside that they thought could direct the firm into the future. Consequently, the three aging entrepreneurs sold Quill Corporation, with sales of $600 million in 1997, to Staples, Inc. for $685 million in stock.

In 1998 Staples was operating 582 superstores throughout the United States, with a comprehensive line of office supply products ranging from copy paper to office furniture. The acquisition of Quill, which management decided to run as an operating division under the Quill name and logo, gave Staples access not only to an extremely successful direct-mail catalogue market, but also to a new and burgeoning Internet market that Quill was just starting to expand. Quill’s $8 million in sales over the Internet alone in 1997 was clearly an indication of a huge future market for office supplies. Quill’s extensive catalogue, database marketing abilities, brand equity, and delivery operation was one of the determining factors in Staples’ decision to acquire one of its traditional rivals.

Quill Corporation’s future seemed assured under the auspices of Staples, which reported revenues of $5 billion in 1998. The executives at Staples recognized what the Miller brothers had taken years to build, and were well aware of the potential profits that could result from careful management of the firm that started, humbly, in a poultry store.