A Summary of United Stationers Product Category Changes -- Coming April 1, 2004

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1 A Summary of United Stationers Product Category Changes -- Coming April 1, 2004 Why are Product Categories and Product Codes Important? How are they used? In order to better organize and track a large number of diverse products, United Stationers organizes its products into various groupings or categories, and employs numerical codes to identify them. These four-digit numbers identify everything from Bookcases, Wood Laminate (0001) to Keyboards, Drawers and Accessories (1109) to Tape, Office (0759), and many others. Altogether there are over 400 separate categories, and several major product category groupings such as Furniture. These product categories and their respective codes are identified on our computer system, and on our Unitape computer database. The codes are often loaded into computer systems and used by resellers to group products for sales history tracking, commission payment, and other uses. What s changing and why? Because of continuing changes in the business products industry and emerging types of new products, United has taken a detailed look at our current Product Categories and Category Codes as reflected on our Unitape computer database and have addressed the following questions: How do today s customers buy business products? Are the current Product Categories aligned with their purchasing behavior? How do you, our reseller, effectively and efficiently market products to ensure greater profitability? As a result of our research and analysis, it has become apparent that we needed to upgrade the current Product Categories and Codes to more accurately reflect today s business environment. A complete conversion chart of our changes slated for April 1, 2004, can be found at As you will see, some categories are new, some have expanded, and some have moved. And while a few categories have remained the same, most have changed in one way or another. We understand that change can be a challenge, but it is also an opportunity. The new Product Categories and Codes will more accurately reflect how products are bought and sold today, and accommodate future trends. The following list of frequently asked questions will better explain the changes and how they affect and benefit you. Why were the Product Categories changed? The changes were necessary for a number of reasons: Products are constantly changing - New products emerge and old ones become obsolete. The new Product Categories offer the flexibility to grow, contract, and Category Change Summary 1

2 change as the market demands. As you know, we proactively seek out the latest products for you and your customers, and we re adding new items all the time. Over the years when a new product was added, it may have been stuck into a category that was logical at the time, but today may no longer make sense. In addition, technology advances have had a significant impact on several product categories, audiovisual and computers in particular. In the past, all AV products were grouped together under a single category serving a common market. The overhead projector is a good example of this. As new technologies emerge, such as Digital Projectors, these new projectors, which are computer-driven, would have formerly been categorized under AV, alongside the overheads. Now, however, a computer category is more appropriate for these high tech products. Customers are changing - The way customers search for and purchase products has changed. We needed a more logical organization. Take Lamps for example. Under the current Product Categories, Lamps were placed under Furniture. Through research into how consumers buy lamps, we learned that they consider Lamps an Office Product, not a piece of furniture. Laser Labels are another example. Customers now consider these a general office supply not a computer supply and the new categories reflect this. Your business is changing - Many products have a short life cycle requiring you to price and market them differently. The new Product Categories and Codes will enable you to better manage these items by providing more precise, up-to-date definitions for each type of product. Furthermore, the new Codes offer you the flexibility to adjust them to suit your specific needs. For example, if you believe Time Clocks should be part of Business Equipment, you can specify that your computer system segment codes 1600 through 1699 (Business Equipment) along with the new code What are the new major groupings of Product Categories? Based on in-depth research and analysis, our new Product Categories more accurately reflect how today s customers search for and purchase products. Previously, there were 15 separate major groupings of categories. In the new system, there are only these: Furniture The least changed grouping, Furniture continues to include such individual categories as bookcases, chairs, desks, tables and the like. Office Products This includes the traditional stationery products such as desk accessories, files, paper, binders, forms, organizers, shipping supplies, writing instruments, adhesives, and staplers. Technology Products Includes these three sub-categories: o Computer Supplies and Accessories In the former system, Computer Equipment and Computer Supplies were in the same Category. They are now split out. Computer Supplies and Accessories includes those items that are used with computers such as ink cartridges, keyboards, cables, toners, discs, data processing ribbons. o Computer Hardware This Category features printers, drives, monitors, modems, software and digital projectors. Category Change Summary 2

3 o Business Machines & A/V Many of these items had formerly been included under the categories of Office Machines or Audio Visual and Meeting Room. Overhead projectors, TVs, calculators, telephones and typewriters fall under Business Equipment. Facility Breakroom & Janitorial Supplies Many of the items in this new Category had been included under General Office Accessories and Supplies. This new Category breaks them out, offering additional marketing opportunities. Products include such items as coffee brewers and snack items, chemicals, brooms, and receptacles. What are the types of changes? Some Categories are NEW For example, there are two Ink Stick categories, 1141 for Compatibles and 1142 for OEM. We separated Compatibles from OEM products for ink jet, copier toner, fax toner and printer toner categories. Some Categories are EXPANDED Optical Disks have expanded from three categories to ten. Toner & Supplies for Copier & Fax, currently under office machines, has expanded from one category to four new categories and will now be found under Computer Supplies & Accessories. Some Categories have MOVED Lecterns moved from AV to Furniture Televisions moved from AV to Business Machines & A/V. Data Binders moved from Computer Products to Office Products Some Categories have CONTRACTED Ribbons have contracted from six categories to two typewriter ribbons, 1619, which can now be found under Business Equipment and printer, calculator, data processing, 1124, which can be found under Computer Supplies & Accessories. Some Categories are currently EMPTY for potential future use 0029 Plants 1400 Desktop Computers or Computers, Desktop 1401 Computers, Laptop & Tablet Some Categories have been SPLIT Projectors have been split into two areas Digital moves to Computer Hardware and Overhead moves to Business Machines & A/V. Cameras Digital moves to Computer Hardware and Film to Business Machines & A/V. Category Change Summary 3

4 Some Categories have NOT CHANGED Most of furniture remains the same. However, many of the category codes are different and the codes range from 0001 to 0099 to accommodate future growth. Some Category NAMES HAVE CHANGED Code 0048 kept the same code number, but the name changes from Accessories for Panels & Partitions to Partitions & Panels Accessories. These types of changes were needed for name consistency How did you determine the categories? We conducted extensive market research, interviewing both end users and resellers. We analyzed current and future product trends and reviewed pricing and margins. It became apparent that our current Product Categories did not reflect today s purchasing environment and had limited capacity to accommodate future growth. How will this affect the General Line Catalog and Electronic Commerce Database? There will really be no impact, since the General Line Catalog and ECDB are organized in a method that helps consumers find products quickly not necessarily how they are sold or tracked. Will this affect my sales history? Potentially, yes. Starting April 1, 2004 the new Product Categories and Codes will be in effect, meaning that you need to consider the impact on your sales history reports, especially if you use that history to pay commissions. You ll want to become familiar with the Categories and Codes so you are accurately interpreting your sales history. You may notice for example, that furniture sales appear to be down. This may be attributable to there being several new codes, not declining sales. How will the changes affect United s Dealer Profitability Model? The Product Category changes will have minimal impact on the Dealer Profitability Model. A few items may perhaps change categories, but they will remain on the key price plans for which you have qualified. Does my systems provider know about these changes? Yes. The industry s systems providers have been sent this same communication. How the Product Categories are used varies from system to system. Please review your system documentation and contact your provider directly if you have questions or concerns. Will I be able to continue to use the old Product Categories and Codes? No. The changes affect most of the Categories and Codes, so you ll need to use the new ones. You will also notice that the Code must be 4 digits in length. While it has been 4 digits in the past, some systems have truncated the initial 0. This will no longer be possible as all 4 digits are required. Category Change Summary 4

5 What will I need to do? All of the new categories will be on United s April Unitape file, available in March. What you need to do depends on how exactly you use the codes today. Most computer systems will automatically overlay the new codes over the old ones, and you may need to do nothing further. However, if you currently use the United supplied codes to create your own special groupings of products for any reason, you may need to manually review these groupings and make adjustments where necessary. The Product Category changes reflect a rapidly-changing business environment that impacts all of us. But we are open to your issues and concerns please communicate them through your system provider or your United Account Manager, or productcategories@ussco.com. Thank you as always for your input. Category Change Summary 5

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