Groupon shuts down offices around the globe, SA safe for now

Daily deals giant Groupon has announced plans to shut down offices around the globe, resulting in thousands of job losses.

The company, once the darling of the ecommerce world, made the announcement via an official blog post in which it claims that the shutdowns are the result of the systems it’s put in place to make the business more efficient over the past few years.

In what it calls “broad restructuring actions to better focus our resources and streamline our international operations”, Groupon says it’ll be ceasing operations in Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay having recently exited Greece and Turkey.

“We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries,” the company says in the blog post.

The restructuring will also see 1 100 people lose their jobs, with most of the positions lost coming from its international Deal Factory and Customer Service divisions.

“Our teams have done great work to streamline our operations in these and other areas,” says Groupon COO Rich Williams, “and our global capabilities and strong regional service centers allow us to do more with less while still providing the high level of service our customers expect and trust”.

Whether or not you buy that kind of sugar-coating, there’s no getting around the fact that those lay-offs represent nearly a tenth of Groupon’s global workforce.

Read more: Groupon: why we need to stop viewing it as a tech company

In the blog post, Williams says that decision to restructure Groupon in this way was not an easy one but that it was necessary to the platform’s survival as an ecommerce technology solution:

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. 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. Evolution is hard, but it’s a necessary part of our journey. It’s also part of our DNA as a company and is one of the things that will help us realize our vision of creating the daily habit in local commerce.

While Groupon South Africa is safe for now, the latest bout of restructuring doesn’t exactly instill confidence in a company that’s seen more than its fare share of turbulence over the past few years.

One of tech’s early “Unicorns” — startups with billion dollar plus valuations — Groupon saw its stock plummet after going public in 2011. Since then it’s battled to get itself on solid financial footing and faced widespread criticism, and fired its founding CEO Andrew Mason. It’s also faced widespread criticism, with some suggesting that it shouldn’t even be considered a tech company.

Read more: Andrew Mason fired as Groupon CEO

In South Africa, it and Daddy’s Deals are the only two companies to really have come out of the group buying boom in anything like their original shape. Some have simply disappeared, while others have pivoted into other niches within the ecommerce space, including curated shopping experiences and flash sales.

The trouble with the Groupon model is that it requires extensive and hard selling to arrange the deals, with little room left for profit once they go on sale to the public. It’s easily replicated sure, but is pretty much the antithesis of the lean, high-growth model tech companies are meant to aim for.

Image: Mike Mozart via Flickr.