The Pros and Cons of Online Employee Discount Codes

an office scene with employees at desks

Recruiting and retaining top talent remains a priority for corporations – especially as many employers are pushing return-to-office. Consumer brands and retailers have an extra tool in their human resources toolbox. They can give employees access to their products at reduced costs. Many merchants do this through online employee stores and employee discount codes. 

Though providing employees with unique promo codes to use on the company’s ecommerce site seems efficient and easy to deploy, those codes are not always the best idea. 

In this post, we will explore the pros and cons of discount codes for employees. Then we will highlight why private employee stores are a better alternative to employee discounts, allowing brands to create a customised, elevated brand experience that benefits employees and employers alike.

Pros of Employee Discount Codes

Employee discount codes give employers an accessible way to incentivise employees. Brands can simply send employees to the flagship ecommerce site, then employees can use a promo code or an employee login to get a discount at checkout. Though this commonplace strategy has its drawbacks, it has a few benefits, too. Let us first explore the reasons why employee discount codes are so popular.


Employee discount codes are an efficient, easy way for brands with DTC ecommerce channels to offer perks to employees. Roughly 145.3 million digital shoppers use discount coupons every year, meaning many brands are already creating discount codes on a frequent basis. Adding an employee code takes very little time and effort, while also increasing the overall purchase size of the average employee.

Easy for Employees to Use

Discount codes are easy for employers to set up — and they are just as easy for employees to use. The vast majority of shoppers (93%) are already using coupon or discount codes online, and 38% buy more than they planned on just because they have a code. Employees are included in this category and are inclined to use their discount when it is easily accessible. Most workers simply need to enter a discount code at checkout or create a shopping account using their corporate email address. Then they can quickly shop and get discounts in a way that they are already familiar with.

Cons of Employee Discount Promo Codes

Indeed, employee discount codes are easy and efficient. However, they typically lack the flexibility and customization that make a great user experience for employees and employers. Here are some of the top ways employee discount codes fall short.

Lack of Flexibility

Though it may be easy for employers to create one discount code, they often have to create multiple codes to control which items are discounted and the level of discount. This can be difficult for both employees and employers to keep track of. On the other hand, a flat discount rate may not be enticing enough for employees. If certain items are excluded from the discount code, this can frustrate employees and lead to dissatisfaction.

Lack of Security

While most employees are respectful, some may be tempted to resell the luxury or high-end products they can buy at a discount. Brands that only offer promo codes on their flagship website run the risk of employees — or others who fraudulently obtained the promo code — buying products at a discount and reselling them on a third-party site. This can lead to serious economic damages to the company, resulting in loss of sales and revenue for shareholders.

Employee Discount Promo Code Sharing

Employee discount codes are easy to use and access. So easy, in fact, that many employees could share their discount promo code with friends and family. This would allow non-employees to access discounts they are not entitled to, and it can be difficult or impossible for employers to prevent this from happening.

Lack of Customisation for Terms and Conditions

Most public, online stores have specific terms and conditions that are directed at customers. These terms and conditions may dictate the return policy, shipping options, payment methods and more. Brands that wish to employ specific terms and conditions for employee purchases cannot do so with a promo code.

A Better Alternative to Employee Discount Codes

a young male consumer is holding a laptop and smiling

Ultimately, employee promo codes put brands and their reputation at risk, increasing the chances of employees reselling discounted products, sharing discount codes with non-employees. In addition, brands wanting to discount items to employees as part of an inventory reduction strategy cannot customise terms or conditions to maximise the strategy. 

“Online employee stores allow brands to have an additional source of income, contribute to sustainability best practices and reward their employees and their loved ones,” said Fernanda Gonzalez de la Barra, VP of Product at ESW. “All while safeguarding their brand image and prestige.”

Private employee-only stores are a better alternative to discount codes, offering an end-to-end solution that delights employees and gives brands and retailers the control they need. 

Here are some of the benefits of private employee stores for brands:

Customised Product Offerings

Private employee stores allow employers to tailor product offerings specifically for employee shoppers. Employees can purchase everything in the store at a discounted price, rather than finding that certain products are excluded from the discount code on the flagship website. Employers can even add products not found on their public website, which gives employees a greater sense of exclusivity.

Increased Flexibility

Employers have unlimited flexibility when it comes to customising their employee store. They can run sales for a limited time, such as during the holidays or for a flash liquidation sale. They can also have an ongoing online store that employees can access at any time. Employers can even set quantity and spend limits to prevent employees from reselling and give more shoppers the opportunity to benefit from reduced pricing.

Increased Control

Employee stores give brands greater control over the user experience. Brands can limit who has access to the website and the employee discount, and employees cannot share their promo code with friends and family. Instead, the brands sends email invitations to the sale and the sale is accessed by invitation only. 

In addition, brands can offer deep discounts in a private environment. This serves a dual purpose. Brands can move inventory quickly without publishing steep price reductions that dilute brand image.  

Customised Terms and Conditions

With a private employee store, brands can create terms and conditions that differ from those of the public website. For example, brands can implement and communicate explicit anti-reselling information to their employees and other invitees.

Also, in exchange for reduced prices, brands can limit returns, ship items in the most economical way and modify other terms and conditions that benefit the merchant.

Additional Inventory Reduction Channel

Brands can use private employee stores as part of a broader inventory reduction strategy. Employees can access products at the end of their life cycles at deep discounts in a separate, controlled environment. Brands choose which items to offer in order to draw down inventory and make room for incoming stock.

The Bottom Line

Employee discounts are a proven perk in the retail industry.

Still, employee promo codes are risky and too rigid to meet the demands of today’s environment.. Instead, brands should consider private stores for employees, which allow for greater customisation, flexibility and an added inventory reduction channel. 

If your brand is interested in building a secure, fully customised employee store, ESW can help. As the preferred partner for world-class apparel, consumer electronics, beauty and luxury brands, we are experts in creating employee stores that foster a heightened sense of exclusivity and employee satisfaction. Contact us today to learn how we can help build your brand with a private employee store experience.