Throwing more cold water on what was once a white-hot daily deal space, LivingSocial is reportedly ready to cut about 10% of its workforce, or as many 400 jobs.
The Washington Business Journal reports.
“For the 5-year-old social commerce company, the long-rumored layoffs reflect a struggle to stabilize itself financially after a frenzied headcount expansion in 2011.”
Mashable writes.
“The layoff shouldn’t come as much of a surprise following Amazon’s third-quarter earnings report, which blamed its $169 million loss on its stake in LivingSocial. Amazon invested $175 million in the daily deal site two years ago.”
According to CNet.
“The daily deals world is awash in financial woes, and LivingSocial is no exception. After a net loss of $566 million in the third quarter, the company is now reportedly about to cut jobs.”
As Forbes notes,
“The news comes on a day when the company’s chief rival, Groupon, is reportedly holding a board meeting to discuss whether or not the struggling company should replace co-founder and CEO Andrew Mason.”
Connecting the dots, Business Insider recalls:
“Earlier this month, Groupon eliminated 648 jobs prior to announcing quarterly revenues that missed expectations.”
LivingSocial, which has raised more than $800 million in funding, entered 2012 with a staff of roughly 5,000, according to the Washington Business Journal.
Regarding LivingSocial, The Washington Post writes:
“It has not yet turned a profit and has since pulled out of some international markets and has sought to diversify its business by selling vacation getaways and everyday consumer goods, with mixed results.”
COMMENTARY: At Groupon, daily deals are fading. That’s the message the company sent many investors this week when it reported a decline in gross billings, or the total value of goods and services bought on its site, between the first and second quarters of this year.
While demand for online coupons may be cooling off, competition is rising, according to new data from Yipit. The deals industry researcher found that Groupon’s market share in North America shrank to 53 percent in the second quarter, down from 56 percent in the previous quarter. Meanwhile, LivingSocial grew its share to 22 percent, up from 20 percent.
Click Image To Enlarge
Travelzoo grew to 3 percent of the market, Yipit said. AmazonLocal, a partnership between LivingSocial and Amazon.com, kept its 2 percent share of the daily deal business.
While it’s not the first time Groupon has given up market share, Unaiz Kabani, product manager for New York-based Yipit said.
“This was the first sizable shift backwards in well over a year.”
In North America, Groupon’s gross billings from daily deals fell 2 percent in the period, Kabani estimated, while LivingSocial grew 15 percent.
Paul Taaffe, a spokesman for Groupon, and Brendan Lewis, a spokesman for LivingSocial, declined to comment.
Like Groupon, LivingSocial is looking to expand beyond daily deals. Last month, the Washington-based company LivingSocial Shop, an e-commerce store for discounted furniture, clothing and other goods. The site mirrors Groupon Goods, a shopping site started last year that accounted for most of Groupon’s sales growth in North America in the second quarter.
Little Andy Mason To Remain As CEO
On Thursday, November 29, Groupon's board of directors met in a regularly scheduled meeting. The board's official agenda included items related to strategy planning for upcoming quarters, but directors were also discussed whether CEO Andrew Mason should be replaced, a person briefed on the matter has said. The board of directors voted and the answer was a resounding YES said Paul Taaffe a spokesman for the company.
"The Board and the management team are focused on the performance of the company and they are all working together with heads down to achieve Groupon's objectives."
The discussion among board members came amid fractures among Groupon's three co-founders—Mr. Mason, Eric Lefkofksy and Brad Keywell—who all sit on the board, people briefed on the matter have said.
Mr. Lefkofsky and other board members have recently grown increasingly frustrated with Groupon's stock performance and have tried to push Mr. Mason to be more vocal in defending the business, these people have said. Groupon's stock has plunged around 80% since its initial public offering last November, as growth has slowed.
Groupon's share prices since its IPO in November 2011 (Click Image To Enlarge)
At a New York conference on Wednesday, little Andy Mason said he remains the best person to steer Groupon.
"If I ever thought I wasn't the right guy for the job, I'd be the first person to fire myself."
Groupon is in a classic Catch-22 situation: If they had voted to fire Andy Mason, Groupon's stock could drop even more. By keeping him, the stock dropped 0.35 or 7.71%. Same result.
If you ask me, Little Andy Mason is a dirt bag for cashing out a significant amount of his Groupon stock during the IPO. He also sold a lot of shares in the secondary market prior to the IP. He clearly doesn't understand how to develop a predictable and sustainable business model that can generate revenues AND profits. In fact, many social media experts and analysts believe that Groupon's businesss model is deeply flawed. A real money-loser if there ever was.
He has also failed miserably in pivoting the company so that it can generate revenues and profits. Since inception, Groupon has lost money. To date, its total accumulated losses since 2008 total $685 million.
Groupon Inc (NASDAQ:GRPN) Annual Income Statements - Years Ending December 31 (2008 through 2011) - Google Finance (Click Image To Enlarge)
Groupon Inc (NASDAQ.GRPN) Quarerly Income Statements - Q3 2011 through Q3 2012 - Google Finance (Clic Image To Enlarge)
Courtesy of an article dated November 29, 2012 appearing in MediaPost Publications Around The Net and an article dated August 15, 2012 appearing in Bloomberg and an article dated November 29, 2012 appearing in The Wall Street Journal
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