layoffs
Layoffs Underway At Two Of New York’s Biggest Flash Sales Sites, Gilt Groupe and Lot18
Source: http://www.businessinsider.com/layoffs-gilt-groupe-lot18-2012-1
Last week BetaBeat’s Nitasha Tiku first reported impending layoffs at Gilt Groupe. We confirmed the rumor from a source who said 50-60 people would be let go in the next week or so.
Some of those cuts happened yesterday. A source told Betabeat the experience was “super uncomfortable” and the “general atmosphere was terrifying.”
Gilt Groupe isn’t the only flash sales site that has been trimming some of its fat. RueLaLa let go of many employees and Lot18, the one-year-old flash sales site for wine and gourmet food, also made cuts yesterday.
BetaBeat’s Adrianne Jeffries reported 15% of Lot18′s staff was let go after she spoke with co-founder Philip James. That comes out to about 14 people.
James called the layoffs “a natural part of the way a business grows and evolves.” James, like Gilt Groupe’s Kevin Ryan, indicated the layoffs were happening in places where the site was over-staffed, but said hiring would continue. “We’re hiring heavily in areas that do make sense for us,” James told BetaBeat.
For Gilt Groupe, the layoffs seem to be a part of the plan to get to cash-flow break-even by Q2. Best of luck to everyone at the companies.
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The Owner Of Flash Sales Site Rue La La Is Laying Off A Big Chunk Of Its Staff
UPDATE: Rue La La has reached out to us to update the story with some additional information.
Rue La La just laid off 11 percent of its 500-person staff, according to the company.
The Boston Business Journal first reported the layoffs.
Site owner Retail Convergence is also shutting down SmartBargains.com, a discount shopping site, according to the report.
Some employees were offered other positions in the company, and everyone was offered some kind of severance package, a source close to the company told us.
“It was a mess upstairs. People were crying all over the place,” one unnamed employee told the Boston Business Journal.
Rue La La operator Retail Convergence raised about $25 million from General Catalyst Partners and Breakaway Partners before being acquired by a company called GSI Commerce for $350 million, reports The Boston Business Journal.
eBay then bought GSI Commerce in 2009, and Rue La La got $500 million in debt and equity financing as part of the deal, according to the report. Retail Convergence, the owner of Rue La La and SmartBargains.com was spun out as part of that deal.
Here’s the full statement from Rue La La:
Since launching in 2008, Rue La La has transformed online shopping and has become a leader in the “private sale” shopping space. In a continued effort to revolutionize off-price shopping, we have made the strategic decision to double down on our core business. This heightened focus on our core includes the restructuring of our Rue Local business by outsourcing our sales force and consolidating SmartBargains.com into Rue La La. SmartBargains.com was originally launched 1999. These moves unfortunately resulted in the elimination of some staff positions. Rue La La has continued to see dramatic growth with nearly $300MM in sales in 2011 and similar growth planned for 2012 and beyond.
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See Also:
- CONFIRMED: Gilt Groupe Laying Off 5-6% Of Its Staff In The Next Week
- THE DWARF-THROWING BILLIONAIRE WHO’S BUYING UP AMERICA: Tales Of The Mysterious Saudi Prince Alwaleed
- Jon Stewart & SOPA (please)
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Groupon and Livingsocial Continue to Slide
Image from: Merkushev Vasiliy/Shutterstock
Group buying/daily deal sites seem to be losing their shine – witness the recent layoffs at Buywithme.com (which has recently merged with Gilt Groupe) and the repricing of the Groupon IPO due to concerns with their model (and other issues). From my perspective, I’ve long thought that the daily deal space was overcrowded and people were starting to ignore the offers – deal fatigue setting in. We can actually see some of this in Compete PRO’s data.
But where it gets interesting is to look at the daily deal aggregators websites – let’s look at Yipit.com (my personal favorite). On Yipit, we see continued, continuous growth (albeit off a small base):
The data on Yipit seems to indicate that people are still interested in daily deals, but that they may be turning to aggregators to deal with the large number of companies and deals.
Now, I don’t think daily deal sites are going away – but there are clearly too many of them right now, and deal quality has been sliding as merchant get more weary of the deals. That will likely lead to margin compression – businesses may not be as willing to jump at deals where Groupon gets 50% of the revenue. Bottom line, I would expect more of these companies to go under or get bought up in firesales.
This all may, in fact, be good news for Groupon and Livingsocial – the two biggest players in the space. As industry consolidation happens, it may give them the ability to hold onto more consumers and therefore have more pricing power with merchants to keep margins up. It’s been an exciting space to watch for the past year – I’m looking forward to updating this post in another 6 months to see what actually happened.
Are you still looking at daily deal websites? How often are you using their services? Let us know in the comments!
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