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 of directors last week, will eliminate most positions by the end of the second quarter, according to a filing Monday with the Securities and Exchange Commission. Groupon is projected to save $70 million annually through the reduction.
Groupon had more than 2,500 employees worldwide at the end of last year, according to spokesman Nick Halliwell. That means the latest round of layoffs would cut the company’s dwindling workforce by more than 20%.
The company declined to say how many positions will be cut 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 revenue. 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 workforce 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% decline year-over-year. 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 start-up scene, the company had more than 11,000 employees worldwide at its peak in 2012.
Launched in 2008, Groupon carved out its own e-commerce niche with deeply discounted daily deals on everything from manicures to food sent to subscribers via email. The business model later expanded to include warehousing and shipping through the Goods platform, putting it in direct competition with online retail giant Amazon.
Since then, the company has shifted exclusively to a third-party business model and now markets itself as a local online marketplace where consumers go to purchase services and experiences. It has been running a “return strategy” under the leadership of Kedar Deshpande, the former CEO of Zappos, who took over the helm of Groupon in December 2021.
Last month, Deshpande released a year-long update on the company’s progress, citing improvements in local market and Groupon inventory, higher purchase frequency and better customer experience, despite facing “expected and unexpected events” that resulted in the removal of more than 1,000 positions.
But Groupon has been in steep decline for much of the past decade, as its once-innovative business model struggles to find its mojo in a much more crowded and competitive digital marketplace.
Google tried to buy Groupon for $6 billion in 2010, but investors and co-founder Andrew Mason said there was no deal. By 2011, Groupon was valued at $25 billion, and the company went public that fall, raising $700 million in the largest technology IPO since Google.
The current market capitalization is approximately $254 million.
