OfficeMax cuts staff to hone Net plans
The office-supply chain lays off 170 people from its sales force, saying the accounts can be more efficiently handled by its Internet catalog service.
The layoffs affect a small fraction of OfficeMax's total work force, which numbers 40,000 nationwide, a company spokesman said. The 170 employees who were laid off handled commercial client sales.
"The company's objective was to become more competitive and to focus more on our Internet catalog service," said Steve Baisden, an OfficeMax spokesman.
Analysts said they were not surprised by the move. "This is the direct result of the company's decision to combine OfficeMax.com and their mail-order business. It's no big deal," said Ursula Moran, a financial analyst with Sanford C. Bernstein.
The move appears to go along with the current e-commerce trend facing many established retailers. While several retailers have cut their work forces to make up for failing e-commerce strategies, Shaker Heights, Ohio-based OfficeMax is letting people go to make better use of the Internet.
And though there have been =news 0-1007-200-2645835.html"="">doubts among analysts and investors regarding whether traditional retailers can successfully move their businesses online, the move by OfficeMax shows that the company is continuing to hone its Internet strategy.
Last year, traditional 
retailers saw a pop in their stock prices when they announced plans to build online stores. But a growing number of e-tailers in recent months have downsized or shut down, prompting investors to question the enormous expense necessary to power Web sites--even for traditional retailers with deep pockets, like OfficeMax and Staples.
The Internet has grounded OfficeMax's stock. Last month, the company said its e-commerce sales for the first half of 2000 increased 439 percent to $52.3 million. But losses still reached almost $11 million.
The company said the loss was attributed to "incremental spending in marketing and advertising"--a major expense for all e-commerce units trying to build brand awareness.
Despite recent troubles, OfficeMax says it is determined to stay the e-commerce course.
"Through the Internet we feel we can service our clients more effectively," Baisden said.