More than 1,000 jobs gone at Living Social and Groupon
Business Insider reports on the shaky world of daily deals websites as LivingSocial announces it is cutting 400 staff. That represents almost 9% of its total workforce. The cuts at LivingSocial follow Groupon eliminating around 650 positions this year.
That’s more than 1,000 jobs gone in a sector that once boomed, but has since struggled with Groupon’s shared price plummeting in the summer leading to some asking the question if the shine has worn off daily deals websites?
Since August when Groupon’s shares hit a life-time low of $6.05 they have continued to fall and are now valued at $4.54. That is an 80% fall from their 52 week high of $25.84.
Andrew Weinstein, a LivingSocial spokesman, said in an email: ”I can confirm that roughly 400 employees were notified that their positions were being eliminated today, or about 10% of our global workforce.”
All this comes in the week that Groupon CEO Andrew Mason’s job has been in question by the board of directors. Mason met with the board yesterday and appears to have survived at least for the time being.
Earlier this week, Mason told a Business Insider conference: “If I ever thought I wasn’t the right guy for the job, I’d be the first person to fire myself.”
With the job cuts at LivingSocial there are also more changes afoot. LivingSocial told CNNMoney that it is moving most of its customer service operations out of its headquarters in Washington D.C. to Tuscon in Arizona. It added that sales and editorial have been “streamlined.”
The way most see it the job losses are the result of a massive growth built on an unsustainable business model.
“LivingSocial posted a net loss of $566 million in Q3 2012. $496 million of LivingSocial’s loss stems from a huge writedown of some of its acquisitions from 2011, the Washington Business Journal reports. LivingSocial’s revenue also fell to $124 million in the three-month period, down from $138 million in the second quarter, Business Insider reports.