Groupon, the American specialist in good deals on the internet, has announced on Tuesday that it plans to cut 1,100 jobs as part of its reorganization.
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Most of the employees who will be laid off work in the company’s sales and customer support.
The downsizing highlights recent efforts of Groupon to shift away from its base as a daily-deals site-providing discounts on products and services-to a company more focussed on e-commerce, an area which is already very competitive because of established giants such as Amazon (AMZN) and eBay (EBAY).
“We saw that the investment required to bring our technology, tools and marketplace to every one of our 40 (plus) countries isn’t commensurate with the return at this point”, Chief Operating Officer Rich Williams wrote in a blog post. The company also said it would gain an “immaterial amount” of savings from these layoffs, which would ultimately be reinvested into the business.
Groupon will stop its operations in Morocco, The Philippines, Panama, Taiwan, Puerto Rico, Uruguay and Thailand.
In order to resolve this issue, the company took a bold step.
“We expect the company to perform more effectively from an operational standpoint because of the decision”. In its infancy, Groupon seemingly wanted to pursue all market opportunities, including on a geographic basis. These measures will enable the company to pay off all the pre-tax charges.
According to BBC news, a study conducted by Professor Utpal Dholakia at the Rice University revealed that small and medium-sized business said they had lost money to Groupon’s Daily Deal component.
This move eventually hit the company in its bottom line, earlier this year Groupon’s management closing down shop in Turkey, Greece, and selling its Indian division to Sequoia.
“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”.
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Groupon’s shares were down about 2% at $4.10 in a weak broader market. The stock has traded in the range of $3.53 and $8.43 in the past 52 weeks.
