Groupon cuts more than 500 employees, plans to focus ‘only on mission-critical activities’ from now on – TechCrunch

Chicago-based Groupon today laid off more than 500 of its employees, 15% of its 3,416-person workforce, according to social media posts by former employees. The downsizing affected workers in teams that include business development, sales, recruiting, engineering, product and marketing.

Groupon confirmed the layoffs to TechCrunch after the story was published.

“Our overall business performance is not at the levels we anticipated and we are taking decisive steps to improve our track record,” CEO Kedar Deshpande said in a statement provided to TechCrunch. The CEO says the layoffs, as well as a reinvestment in marketing and initiatives that drive customer purchase frequency, will set the company up to be cash-flow positive by the end of 2022.

In a letter to staff, Deshpande said Groupon is downsizing its North American sales teams to focus on “self-service merchant procurement capabilities.” It is also reorganizing the company to focus “only on mission-critical activities and lean on more external support.” “In addition, we propose to reduce cloud infrastructure and support functions as we complete migrations to the cloud.” Groupon is also closing its Australia Goods business, more than a decade after it first launched there. Finally, Groupon said it will “streamline” its real estate footprint to be more in line with hybrid work.

Coupon-seeking Groupon has grown to have strong competition in e-commerce since its founding in 2011. Rakuten and Honey, which sit in consumers’ browsers to search the Internet and display related deals, have become companies massive. All platforms make money from affiliate fees and revenue share partnerships, which means the more competitors there are, the bigger the fight for customer acquisition. A Groupon spokesman said he doesn’t see Rakuten and Honey as competitors because the companies focus more on physical products, while Groupon focuses on experiences and services.

Still, the tailwinds of e-commerce have changed as consumer spending on reaction to the market crash. It’s a tough time to be a growth-stage startup.

In recent years, the number of Groupon shoppers has dropped dramatically. According to Statesman22.2 million visitors to the company’s site purchased at least one offering in the first quarter of 2022, up from nearly 54 million in the fourth quarter of 2014.

The layoffs, while substantial, aren’t as big as the cuts Groupon made to its workforce in 2020. In April of that year, Groupon said it would lay off or furlough 2,800 employees as business “deteriorated” from the pandemic. of COVID-19. After the restructuring, Groupon gradually scaled back its product category as it switched to a third-party marketplace model, in which merchants took responsibility for fulfillment and returns.

According to On its jobs page, Groupon has openings for 67 positions across account management teams, engineering, software development, and more. The company is trading at $13.89 at press time, down 67% from its 52-week high of $41.66.

It’s likely no coincidence that the layoffs come before the release of Groupon’s second quarter 2022 financial data. results this afternoon. Revenue was $153.2 million in the second quarter of 2022, down 42% from a year earlier, with just 21.1 million customers making one or more purchases in the last 12 months. The company blamed the transition of its goods business to a marketplace model, as well as a “decrease in engagement” on the platform.

Below is the full memo Groupon says Deshpande sent to staff this morning:

Equipment,

I am writing to you with some difficult news. Later today, we will publicly announce a plan to optimize our cost structure, including our proposal to eliminate approximately 500 positions worldwide. While we have discussed the need to streamline our organization as part of our strategy to transform Groupon into the destination for local experiences and services, I recognize that saying goodbye to colleagues will affect us all more than any words on a piece of paper.

We have conducted an intensive review of our organization and business structure, and the actions we are announcing today were not taken lightly. The impact will be felt primarily in our Technology organization, North American Sales and our Australia Products business.

Today’s news will be hard to digest no matter how it is presented, but I want to share as much as I can about why we are taking these steps.

Simply put, our cost structure and performance are out of alignment. To position Groupon to successfully execute our turnaround plan, we have to lower our cost structure. For the past three months, the senior leadership team has been challenging our current processes and automating the way we work, both with an eye to driving costs out of the business and improving our productivity. As a result, we are announcing the following actions to:

  • Reduce our North American sales team and continue to scale our self-service merchant acquisition capabilities. As we transition to a self-service-led sales organization, we look forward to onboarding and managing inventory and continuing to drive efficiencies for our trading partners.
  • Submit a proposal to reorganize and align the size of our technology organization with our business needs, focusing our resources only on mission-critical activities and relying more heavily on outside support. As part of this work, we will also explore opportunities to leverage engineering centers of excellence to increase efficiency and productivity. Additionally, we propose to reduce cloud infrastructure and support functions as we complete cloud migrations.
  • Closing our Australian goods business, which runs on a different platform than the rest of the goods business, making it too expensive and complex to manage on an ongoing basis.
  • Streamline our real estate footprint to reflect the needs of our new hybrid work model.

The vast majority of these cost actions would occur this year. Going forward, we will continue to look for ways to optimize, such as building on automation and optimizing our technology platform, two areas where we have made significant progress over the past three months as teammates have stepped up and challenged our current processes. We will also continue to review our cost structure in other areas and ensure that it is aligned with the size of our current business, while still giving us room to grow.

To those affected by today’s news

For those of you whose roles are affected today, we are sincerely grateful for all the contributions you have made and want to do everything we can to support your success in the next steps of your career. For certain employees at International, you will be notified of our proposed changes and will enter a consultation phase in the coming days and weeks.

Whenever possible, we will give departing employees the option to keep their laptops, offer relocation services as an additional resource, and, where legally permitted, provide the opportunity to submit your information to a list of Groupon talent who We will share on LinkedIn. We will be notifying affected employees directly throughout the day, some of whom we are asking to stay on for a period of time to help with the transition. All affected employees will be receiving severance and other benefit details from Human Resources to support you in the coming weeks and months.

Looking to the future

I joined Groupon because I truly believe our marketplace is special: a place that helps people make life-changing memories and forge new connections that can last a lifetime. Today, my belief that the Groupon marketplace can become the destination for local experiences and services is as strong as ever. We are well positioned to transform our business and are laying the groundwork for growth. Together, we can create a fundamentally better experience for our customers and merchants.

We will continue to discuss today’s actions and our transformation in the coming days – as a reminder, we will host a Global All Hands meeting this Wednesday at 9:30am CT / 3:30pm BST / 4:30pm CEST to answer any questions. , which you can send in advance through this form. In addition, your STeam leaders will also be bringing their organizations together for short, informal town hall meetings over the next few days.

Thank you for your continued commitment to Groupon.

Kedar Deshpande

CEO

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