Groupon shuts operations, sacks 1,100 employees in six countries and Puerto Rico

Daily deals and e-commerce site Groupon is set to shut down its operations in six countries, as well as Puerto Rico. Headquartered in Chicago, Illinois, and co-founded by Chief Executive Officer (CEO) Eric Lefkofsky, Groupon will lay off 1,100 jobs, mainly from the sales and customer service operations of the company.

Groupon Chief Operating Officer (COO) Rich Williams revealed this restructuring in a blog post stating, “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. So, we decided to exit a number of countries where the required investment and market potential don’t align.”

Groupon will stop its operations in Morocco, the Philippines, Panama, Taiwan, Puerto Rico, Uruguay and Thailand. TechCrunch reports that the company is laying off its 1,100 employees at the cost of $35 million (AU$49.6 million).

The American e-commerce company had previously stalled its operations in two Southern European countries – Greece and Turkey. The reason cited for this step taken by the company was that it failed to meet the financial expectations in these countries. In addition to this, the company also sold off a stake in Groupon India to Sequoia India, which is part of the venture capital firm based in Menlo Park.

The company was operating in more than 40 countries before cancelling its operations in several nations. Groupon aims to restore the correct balance to its strategy. Instead of focusing on daily deals, it now has an objective to establish a more diverse business by concentrating on local commerce. These measures will enable the company to pay off all the pre-tax charges. Groupon also stated that the money that they save from this cost-cutting measure will be reinvested in the business.

The Washington Post reports a decline of 2.5 percent in the company’s stock in morning trading Tuesday to about $4 (AU$5.68) a share. Another point of dismay for Groupon is that the company’s stocks have lost half of their value since the beginning of 2015.

The decline of daily deal sites is often blamed on deal fatigue, spam and angry businesses.

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