Apple Inc. (AAPL), Wal-Mart Stores, Inc. (WMT), Best Buy Co., Inc. (BBY): How Well Do You Know E-commerce?

When is a box not a box?

So the Big Box is in trouble. Well, that must mean that Staples is about to go under, right?  Certainly its stock price has slumped from the mid-20s into the low double digits over the past few years. But don’t be too quick to judge. Believe it or not, Staples is the #2 internet retailer in the country!

Staples’s big box retail stores actually represent only a fraction of its business. Most of its sales are to businesses, which have an easier time ordering all their office supplies from one place, and most of those sales are handled online (the same is true for their competitor Office Depot Inc (NYSE:ODP), which is #6 in annual online retail sales). Not to mention, while Staples isn’t a branded store (i.e. they don’t exclusively sell Staples-branded products), many of the items they carry (think paper clips and giant packs of, well, staples) are Staples-branded. Not to mention, the stores serve as de facto warehouses for their massive inventory and delivery business. Amazon has to ship items purchased online from the nearest regional distribution center. Staples only needs to ship from the local Staples store. And if they don’t have the item in-store?  Like Wal-Mart Stores, Inc. (NYSE:WMT), they use their existing shipping infrastructure to get it there.

So why has Staples stock slumped? Well, when businesses cut employees, they also cut those employees’ needs for office supplies (when Frank gets fired, he doesn’t need a new stapler or pens). So the recession and high unemployment rate disproportionately hurt Staples. As hiring picks up, however, Staples’s sales should improve as well. I’m not sure we’re there yet, but I’m keeping a close eye on Staples stock and will be ready to jump on if it starts to show signs of life. Currently, Staples is trading at a P/E of less than 9, which seems low for the #2 Internet retailer in the country.

The answers

From greatest to least, the companies are: Amazon ($48 billion), Staples ($10.6 billion), Apple Inc. (NASDAQ:AAPL) ($6.6 billion), Wal-Mart Stores, Inc. (NYSE:WMT) ($4.9 billion), and Best Buy Co., Inc. (NYSE:BBY) ($3 billion).  You can find the full list of the top 500 Internet retailers in the country here.

The article How Well Do You Know E-commerce? originally appeared on Fool.com and is written by John Bromels.

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