Dive Brief:
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E-commerce marketplace and deals site Living Social is laying off 280 employees—between 50% and 60% of its current staff—Re/Code reports.
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The effort is in the service of making LivingSocial a leaner company, though CEO Gautam Thakar said the firm is open to selling the business if the possibility comes up during investment talks.
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About 120 LivingSocial customer service jobs will be replaced through outsourcing, and the company will directly employ some 200 to 225 people once the cuts are made, according to the report. LivingSocial has eliminated some 900 jobs over three rounds of layoffs since Thakar was named CEO in mid-2014 in place of founder Tim O’Shaughnessy.
Dive Insight:
In addition to slashing jobs, LivingSocial is re-focusing its business and building up a new product that allows restaurants to grant discounts to customers using a LivingSocial-linked credit card on their phones. Thakar told Re/Code that the company is looking for investors to help expand that product to more cities (it's currently in tests in three cities), and to services and sales beyond dining.
While Re/Code notes that LivingSocial is attempting to trim any fat in order to better position itself against bigger rival Groupon, that site has struggled of late as well. The voucher-deals model is failing to thrive in an era of omnichannel, where retailer-based loyalty programs are all-important, both in maintaining direct relationships with customers as well as gleaning essential data from loyal customers in order to help a retailer define itself.
Not only did deals sites like LivingSocial and Groupon take customers away from those retailers, but many smaller stores, restaurants and service businesses who partnered with the sites on deals found that they lost money on some of the offers and didn’t always see much repeat business from them.
Customers have drifted away from deals sites as well, tired of buying coupons they failed to use in time, or becoming disillusioned because some “deals” were more or less available on the open market. In any case, customers have failed to stick, and LivingSocial is feeling that.
