According to posts from former employees on social media, more than 500 of the company's employees were laid off today. Merchant development, sales, recruiting, engineering, product and marketing were affected by the reduction.
It's not clear what percentage of the entire staff was affected by the layoffs.
"Our overall business performance is not at the levels we anticipated and we are taking decisive actions to improve our trajectory," the CEO said. The layoffs, as well as a reinvestment in marketing and initiatives that drive customer purchase frequencies, will set the company up to generate positive cash flow by the end of 2022, according to the CEO.
In a letter to staff, Deshpande said that the sales team in North America will be reduced. It is reorganizing the company to focus on mission-critical activities. As we wrap up cloud migrations, we are considering reducing cloud infrastructure and support functions. The Australia Goods business was launched more than a decade ago. The real estate footprint of the company will be rationalized to be more in line with hybrid work.
Since its founding in 2011, there has been steep e- commerce competition. The companies that allow consumers to browse the internet to find deals have grown into giants. The more competitors a platform has, the bigger the fight is for customer acquisition. A person from the company said that they don't see the companies as competitors because they are more focused on physical products.
The market downturn has led to changes in consumer spending. It is difficult to be a growth stage startup.
The number of shoppers has fallen steeply. 22.2 million visitors to the company's site bought at least one offer in the first quarter of 2022, down from 54 million in the fourth quarter of the previous year.
The layoffs aren't as large as those made by Groupon. In April of that year, the company said it would lay off 2,800 employees due to the decline in business caused by the flu. In order to shift to a third-party marketplace model, the goods category was phased out.
67 roles are available in teams across account management, engineering, software development and more. The company is currently trading at $13.89, down from its high of $42.66.
It is likely that the layoffs came before the release of the financial results. 21.1 million customers made one or more purchases within the last 12 months and revenue was down 42% from the previous year. The transition to a marketplace model was blamed for the decline in engagement on the platform.
The memo was sent to staff this morning.
Team,
I’m writing to you with some tough news. Later today, we will publicly be announcing a plan to streamline our cost structure, which will include our proposal to remove approximately 500 positions globally. 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 hit us all harder than any words on a piece of paper ever can.
We’ve done an intensive analysis of our organization and business structure, and the actions we are announcing today were not undertaken lightly. The impact will be felt primarily across our Technology organization, North America Sales and our Australian Goods business.
Today’s news will be difficult to digest no matter how it’s presented, but I want to share as much as I can about why we are taking these actions.
Put simply, our cost structure and our performance are not aligned. In order to position Groupon to successfully execute our turnaround plan, we have to lower our cost structure. Over the last three months the senior leadership team has been challenging our current processes and automating how we work, both with an eye toward taking costs out of the business and improving our productivity. As a result, we are announcing the following actions to:
- Reduce our North America sales team and continue to scale our self-service merchant acquisition capabilities. As we transition to a self-service led sales organization, we expect to be able to onboard and manage inventory and continue to drive efficiencies for our merchant partners.
- Put forward a proposal to re-organise and align the size of our tech organization to our business needs, by focusing our resources only on mission-critical activities and leaning more on external support. As part of this work, we will also be exploring opportunities to leverage engineering centers of excellence to increase efficiency and productivity. In addition, we are proposing to reduce cloud infrastructure and support functions as we wrap up cloud migrations.
- Close our Australia Goods business, which runs on a different platform than the rest of the Goods business making it too costly and complex to manage on an ongoing basis.
- Rationalize our real estate footprint to reflect the needs of our new hybrid work model.
The vast majority of these cost actions would happen this year. Going forward, we’ll continue to look at ways to optimize, like leaning into automation and streamlining our tech platform, two areas we’ve made significant progress in over the last three months as teammates stepped up and challenged our current processes. We will also continue to review our cost structure in other areas and ensure it’s aligned with the size of our current business, while still giving us room to grow.
To those impacted by today’s news
For those of you whose roles are impacted today, we’re sincerely grateful for all of the contributions that you have made and want to do our best to support your success in the next steps of your career. For certain employees in International, you will be notified of our proposed changes and will enter into a consultation phase over the coming days and weeks.
Where possible, we will be giving departing employees the option to keep their laptops, offer outplacement services as an additional resource, and where legally permitted, provide the opportunity to submit their information into a Groupon Talent List that we will be sharing on LinkedIn. We will be notifying affected employees directly throughout the day today, some we are asking to stay on for a period of time to assist with the transition. All impacted employees will receive information from HR regarding severance and other details on benefits to support you over the next weeks and months.
Looking Ahead
I joined Groupon because I truly believe that our marketplace is special: a place that helps people create core memories and forge new connections that can last a lifetime. Today, my conviction 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 company and we are laying the foundation for growth. Together, we can create a fundamentally better experience for our customers and merchants.
We’ll continue to discuss today’s actions and our transformation in the coming days: as a reminder we’ll be hosting a Global All Hands meeting this Wednesday at 9:30am CT / 3:30pm BST / 4:30pm CEST to answer any questions, which you can submit in advance via this form. In addition, your STeam leaders will also be bringing their orgs together to host short, informal town halls over the next few days.
Thank you for your continued commitment to Groupon.
Kedar Deshpande
CEO
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