January 30, 2003, 12:00 AM

Why—and how—some employers encourage online shopping at work

Why and how some employers encourage online shopping at work—and how retailers are getting their sites before those employees via corporate intranets.

When The Buckle Inc. wanted to extend its reach to sell its apparel fashions for young people, it went to where the money is: the wallet-wielding parents of its typical 12- to 24-year-old customers. And it reached them where commerce-supporting bandwidth is greatest-at the office.

The Buckle and dozens of other companies sell directly to consumers through corporate intranets and web sites under an arrangement with Xylo.com, a unit of Workstream Inc., an Ottawa-based company that focuses on providing a broad range of human resources programs designed to help employers acquire, develop and retain employees.

Actually providing the means to complete shopping at work lands some employers smack in the middle of the debate about shopping at work: Some argue that such shopping saps employee productivity and puts a burden on bandwidth that a company pays for, after all, to conduct business. Others argue that it boosts morale and actually makes employees more productive because it relieves the anxiety of completing one more chore.

In fact, Workstream has based its business on the latter argument. And its customers back it up. At Eddie Bauer Inc., Seattle-based unit of Spiegel Inc. which sells apparel and recreational equipment at 500 stores and EddieBauer.com, the corporate intranet and the ability it offers to shop from work plus discounts on merchandise have proven to be among the most popular employee benefits. “It’s very important to have a positive work environment to support employee morale, and our employees appreciate the time savings to shop through the intranet,” says Karl Weiss, manager of benefits for Eddie Bauer, which has offered a Xylo shopping portal on its intranet for more than two years. “We do annual surveys on the popularity of employee benefits, and it’s always one of the top things that employees value about the workplace.”

Special discounts

Xylo’s specialty is in providing tools and content that help integrate employees into the workplace and maintain high morale, says Art Halloran, president and COO of Workstream. It does that by developing web pages, co-branded by Xylo and its client employers, that offer information and services ranging from details on corporate policies and health insurance to employee message boards and assistance in joining carpools and company sports teams. But among the most popular offerings delivered by Xylo and its corporate clients are shopping malls with links to retailers, manufacturers and service providers that, through deals arranged by Xylo, offer special discounts on products and services, such as 10% off the price of a Dell computer, special deals on toys from Kmart, apparel from Buckle or gifts from 1-800-Flowers.

Corporations offering such shopping options to their employees include a diverse group such as Eddie Bauer, Nordstrom Inc., Hewlett-Packard Co., Wells Fargo & Co. and Northwest Airlines Inc. “A growing percent of online shopping is either completed or at least initiated from the workplace,” says Lydia Pierson, director of e-commerce for Kearney, Neb.-based Buckle, which operates more than 300 stores in 37 states as well as the recently redesigned Buckle.com. “We’ve been very pleased with the opportunity to reach our customers in their work environment and offer special incentives.”

Buckle also reaches much of its primary audience of 12- to 24-year-old shoppers through its Xylo connection. In all, there are more than 200 companies that sell directly to employee-consumers through Xylo. Many of them are manufacturers and service providers that see Xylo’s online arrangements as a way to reach consumers and build relationships with them. “These consumers become very loyal to the people who provide them with products and services,” Halloran says. “We’re providing a unique situation for vendors, creating a close community for them.”

Halloran reports that Xylo shopping mall activity is rising in terms of number of transactions and web site visitors. He said it did particularly well during the 2002 holiday shopping season. In addition to Buckle and Dell, other vendors include retailers Men’s Warehouse, Barnes & Noble and Shoes.com, and travel industry providers American Airlines, Cendant Corp (which offers discounts at hotel chains including Days Inn, Ramada Inn and Travelodge), travel services organization Club Med and City Pass, which offers discounted tours of major cities.

Halloran says Xylo does not offer exclusivity to retailers in any particular online shopping mall, though retailers may arrange for an exclusive deal directly with clients. He adds that clients at times will request having a new retailer added to the Xylo system. Workstream would then approach that merchant and in most cases make it available to all of its clients. He also notes that employers have extensive control over which sellers appear in the co-branded shopping malls and their content. “The employer has the option of reviewing what’s offered and selecting or eliminating products or services we can provide through participating vendors,” he says.

Boosting productivity

By developing intranets with multiple attractions, such as internal company news and message boards, Xylo helps build traffic and the number of potential customers for participating retailers and other service providers linked to the intranet’s shopping mall section.

Although some employers worry about losing productivity by letting employees shop online, Eddie Bauer finds the system actually helps productivity--for management as well as employees. “Everyone’s in a time crunch today, and nobody has time to get things done,” Weiss says. “But if I can shop between projects, then I’ll be more productive if I’m not worrying about how and when I’m going to get to the shopping mall and to the post office to send a gift to my brother in Nebraska.”

He adds, “Our policy states that employees can spend a reasonable amount of time shopping online, as long as they’re getting their work done. In an information economy, employees know what their goals are and don’t need someone looking over their shoulder.”

Moreover, the Xylo program saves Weiss himself a significant amount of time, he says, because it frees him from having to deal directly with companies that would provide employees with special offers on products and services. “I have very little time in the day to coordinate with vendors, so this saves me a huge amount of time,” he says.

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