The salad days of social commerce have come and gone, judging by the woes of group buying and daily deals sites. In the latest fillip of bad news, Groupon has revealed that it will lay off around 1,100 employees over the next few months, most of them serving the company’s overseas divisions.
That’s about 10% of the company’s total workforce.
The company is also ceasing operation in Morocco, Panama, the Philippines, Puerto Rico, Taiwan, Thailand and Uruguay, according to COO Rich Williams, who made the announcement in a blog post.
Williams explained: “We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries. So, we decided to exit a number of countries where the required investment and market potential don’t align.”
Williams added that the layoffs are also, in part, a reflection of the company’s move from a labor-intensive sales business to a leaner e-commerce model with more self-service.
The cuts require Groupon to take a $35 million pre-tax charge, due to severance and compensation costs.
Previously, Groupon reported its active customer base in North America increased modestly from 20.8 million at the end of 2013 to 24.1 million at the end of 2014. But it’s not the only social commerce company finding it tough going: Living Social saw total revenues slip from $302 million in 2013 to $231 million in 2014.
In November 2014, LivingSocial laid off 400 employees, or about 20% of its total workforce of 2,000, as well as closing an office in Torrance, CA. At its peak back in 2011 LivingSocial employed over 4,000 people worldwide.