2007 Best Practices Award Winner: Corporate Express US Inc.

Leveraging predictive analytics allowed Corporate Express to innovate past intuition and judgment to base pairing decisions on solid math.

Category: Predictive Analytics
Solution Sponsor: MicroStrategy

Corporate Express, part of the Dutch-based Corporate Express NV (NYSE: CXP), is one of the world’s largest B2B suppliers of essential office and computer products and services, with 2006 sales of approximately $4.0 billion in North America, including $3.6 billion in the U.S.
 
Corporate Express’ distribution infrastructure is among the industry’s most advanced. It delivers an average of $13 million in products every business day in the United States, $6.31 million of which is ordered through the Internet. To increase sales on all combined orders, Corporate Express built a market basket application to recommend related products to customers during their purchase.

The market basket application is based on reference products and correlated products. When a customer chooses a reference product, the application presents nine mathematically correlated products to pair with the reference product. Optimal pairing is determined by three metrics:

• Support: The probability that the reference and correlated products will be purchased together.
• Confidence: The probability that the correlated product will be purchased once the reference product is added to a shopping cart.
• Lift: The improvement in the probability that the correlated product will be purchased once the reference product is added to a shopping cart, divided by the original probability that the correlated product will be purchased independently.

With the application in place, analysis now shows and often predicts what items might occur together in a checkout session. The BI application is having enormous impact. The company can track all online baskets and identify what SKUs are most profitable or poor performers when purchased in combinations. According to Corporate Express, the market basket application has generated the following ROI results:

• Average order size for basket purchases increased more than 2 percent.
• Average order size for orders with a basket pairing is more than twice that of orders without a basket pairing.

Many companies present complementary products as part of the shopping experience, often based on the professional judgment of marketing or merchandising organizations, and complements are often intuitive (e.g., pairing staplers with staple removers). Leveraging predictive analytics allowed Corporate Express to innovate past intuition and judgment to base pairing decisions on solid math.

About Corporate Express
Corporate Express provides customers with a single source of business products and services, so that they can focus their resources, energy and time on their core business. Corporate Express helps organizations to save time and maximize their productivity.

Headquartered in the Netherlands, Corporate Express NV generated 2006 annual sales of EUR 6.3 billion. The Company has a widespread global distribution network spanning North America, Europe and Australia, has close to 19,000 employees, and operations in 20 countries. Corporate Express is listed on Euronext Amsterdam (Euronext: CXP) and in New York (NYSE: CXP). For more information, please visit www.CorporateExpress.com.