Good Times Are Over, Groupon to Lay Off 1,100 Employees

Groupon management has announced plans to lay off over 1,100 employees and shut down operations in over 7 countries, in a move which will cost the company at least $35 million / €31.3 million, before taxes.

The news was announced on the company's blog by Rich Williams, Groupon COO, and comes to pile on recent bad news coming out of the company's headquarters.

Groupon was founded in 2008 and became a worldwide sensation thanks to its very popular daily deals format. The company expanded quite rapidly and spurred thousands of clones around the Web, all offering daily deals at extremely low prices.

This eventually created a bubble effect, which around three or four years ago popped, taking down most of the clone sites.

The only one left standing was Groupon, but the company is not doing that great either, shifting operations in recent years from a daily deals site to one focused on local businesses, not necessarily offering "great deals."

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.

While at the start of the year Groupon was active in 43 countries, now it only serves 33, after agreeing to also exit from Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay, all by the end of September 2016.

Employees will get severance pay

Over 1,100 employees will be let go, costing the company $35 million / €31.3 million in severance, compensation, and various benefits.

Most of the employees who will be laid off work in the company's sales and customer support.

"Let’s be clear: these are tough actions to take, especially when we believe we’re stronger than ever. 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" said Rich Williams. "Yet 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."

The company has a positive tone in its blog post, but let's be honest. When did you hear of anything interesting coming out of Groupon's site lately
http://news.softpedia.com/news/good-times-are-over-groupon-to-lay-off-1-100-employees-492530.shtml

Groupon business model is capture on the advertising and promotion expense of participating merchant, and it cannot sustain on long term basis. Imagine you are paying 30 - 50% less from the normal selling price, is there a profit margin left for the merchant?

aerobwala said:

Groupon business model is capture on the advertising and promotion expense of participating merchant, and it cannot sustain on long term basis. Imagine you are paying 30 - 50% less from the normal selling price, is there a profit margin left for the merchant?

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Thought is the company who absorb the cost..not Groupon

Correct, client die, they also die.

MovieStar said:

Thought is the company who absorb the cost..not Groupon

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aerobwala said:

Correct, client die, they also die.

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Whole world is in economy downtrend.
Should just be frugal.
Anyway I seldom dine out or do purchase.

Bo chap.

aerobwala said:

Groupon business model is capture on the advertising and promotion expense of participating merchant, and it cannot sustain on long term basis. Imagine you are paying 30 - 50% less from the normal selling price, is there a profit margin left for the merchant?

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I think if you want to participate in Groupon as a merchant. You must be able to entice your customer to spend much more they intend to. As much as Groupon could sell discounted tickets, the merchant must be able to make visting customer spend more on their product and menu when the customer visits.

If you can't, you can get credit card company to do the same. But letting customer have heavily discounted price if customer uses certain credit card.


Menu Price : $30
Groupon Price : $18
Groupon profit : $??
Merchant Profit : $??

What's so good about groupon. Just to get abit cheap have to go through so much hassle. I never support b4

chootchiew said:

What's so good about groupon. Just to get abit cheap have to go through so much hassle. I never support b4

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I used to think like you till I tried it.
Nothing hassle you pay online and printout Machiam buy airticket.
Many of the merchants I'm already their customers so the discounted price is welcome.
Others I just to try out....hit and miss but it's things I otherwise wouldn't have tried.....some friends tried the travel deals.....(hotels and tours packages mostly)......and it's really dirt cheap if you manage to get a good deal

Narong Wongwan said:

I used to think like you till I tried it.
Nothing hassle you pay online and printout Machiam buy airticket.

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oic what about hard items do they mail to home Last time follow a friend all the way to their orfit to collect some bloody ext hdd just to save a few dollar

chootchiew said:

oic what about hard items do they mail to home Last time follow a friend all the way to their orfit to collect some bloody ext hdd just to save a few dollar

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I usually buy the makan vouchers. No restrictions only expiry date so as good as cash.
I've bought some useless stuff Machiam those tv call ads impulse buys.....and its using delivery by sing post registered mail.

Groupon profit = x% of $18, + forfeiture of coupon at expiry of promotion period for people who bought the Groupon but did not turn up at the shop to redeem their coupon.

Merchant profit? No idea, depend on how they do the markup.

congo9 said:

Menu Price : $30
Groupon Price : $18
Groupon profit : $??
Merchant Profit : $??

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