Groupon plans to lay off another 500 employees, further thinning the ranks at the struggling Chicago-based online marketplace.
The restructuring plan, approved by the company’s board last week, will eliminate most of the positions by the end of the second quarter, according to a Securities and Exchange Commission filing Monday. Groupon is projected to save $70 million annually through the downsizing.
Groupon had more than 2,500 employees globally at the end of last year, according to spokesman Nick Halliwell. That means the latest round of layoffs would reduce the company’s shrinking workforce by upward of 20%.
The company declined to say how many positions will be eliminated at the Chicago headquarters. About a third of the global workforce was based in Chicago as of last summer.
In August, Groupon announced it was laying off 500 employees as it sought to cut costs amid falling revenues. That round of layoffs included 293 positions associated with Groupon’s headquarters at 600 W. Chicago Ave.
At the end of the third quarter, Groupon reported a global headcount of 3,077. The company will update employee totals during its yet-to-be-announced fourth quarter earnings report.
Groupon generated $451 million in revenue through the first nine months of 2022, a 39% year-over-year decline. It lost $182 million through September, compared to a net income of $89 million during the same period in 2021.
Once the face of Chicago’s tech startup scene, the company had more than 11,000 employees worldwide at its peak in 2012.
Launched in 2008, Groupon created its own e-commerce niche with heavily discounted daily deals on everything from manicures to meals, blasted out to subscribers via email. The business model subsequently expanded to include stocking and shipping products through the Goods platform, which put it in direct competition with online retail giant Amazon.
The company has since shifted exclusively to a third-party business model and now promotes itself as an online local marketplace where consumers go to buy services and experiences. It has been executing a “turnaround strategy” under Kedar Deshpande, former CEO of Zappos, who took the helm of Groupon in December 2021.
Last month, Deshpande posted a one-year update on the company’s progress, citing improvements in Groupon’s local marketplace and inventory, increased purchase frequency and a better customer experience, despite facing “expected and unexpected challenges” that resulted in the elimination of more than 1,000 positions.
But Groupon has been in steep decline for much of the past decade, as its once groundbreaking business model struggles to find its mojo in a far more crowded and competitive digital marketplace.
Google tried to buy Groupon for $6 billion in 2010, but investors and co-founder Andrew Mason said no deal. By 2011, Groupon was valued at $25 billion, and the company went public that fall, raising $700 million in the largest tech initial public offering since Google.
The current market capitalization is about $254 million.