Discount hub Groupon is to lay off 1,100 staff as part of what the company describes as “tough actions” to prepare for the future.
A blog post from group COO Rich Williams announced plans to “eliminate” the positions as part of an ongoing streamlining process.
Most of the roles are lost in Groupon’s departments for customer service and sales, with the company’s operations in Morocco, Thailand, Uruguay, the Philippines, Panama, Puerto Rico and Taiwan ceasing immediately.
This follows the recent closure of Groupon’s sites in Greece and Turkey.
Despite the staff and office cuts, Williams maintained that Groupon was “stronger than ever” as it pursues its transition from daily deal site to e-commerce tech platform.
Losses on losses
The immediate site closures in Greece and Turkey amid reports of ill-judged expectations may have put certain areas of its international presence under threat.
What couldn’t have been predicted is the scale and expected cost of Groupon’s downsizing.
Williams says a “close, honest” look at how the company does business as it looks to raise funds to improve its technology has resulted in a need to operate in fewer countries, perhaps where the requirement of investment is low.
The company is already banking on the changes fuelling a pre-tax charge of $35 million, with around $22-25 million coming as a result of severance payouts in Q3.
“Just as our business has evolved from a largely hand-managed daily deal site to a true ecommerce technology platform, our operational model has to evolve,” Williams commented.
“Evolution is hard, but it’s a necessary part of our journey. It’s also part of our DNA as a company and is one of the things that will help us realise our vision of creating the daily habit in local commerce.”
Groupon “has” to evolve
Founded in 2008, Groupon quickly became one of America’s key sources for discounts before expanding its business overseas, counting LivingSocial as one of few serious competitors worldwide.
The company is said to have turned down a near $6 billion takeover by Google in 2010 but has since watched its value shrink to the $4.98 billion seen earlier this year.
Although analysts then pointed to financial power in the form of its “stealth assets”, including a recently sold stake in South Korea group Ticket Monster, the company’s core business has consistently struggled to return a profit.
Troubles with generating a return appear to have come at the expense of Groupon’s staff roster, which grew rapidly from just 1,500 to over 8,000 around the world between 2010 and 2011.
Announcing the cuts, Williams, who heads up Groupon’s operational division, also declared the company’s intention to focus on the long term and planning for the future.
“We’re doing all we can to make these transitions as easy as possible, but it’s not easy to lose some great members of the Groupon family.
“Yet just as our business has evolved from a largely hand-managed daily deal site to a true e-commerce technology platform, our operational model has to evolve.”
The cuts are expected to be made over the coming months.