Groupon to cut 1,100 jobs, exit 7 countries

Daily deals giant Groupon is cutting 1,100 jobs and closing down operations in seven countries – three of them in Asia – as it struggles with slowing growth.

Rich Williams, the company’s chief operating officer, announced this in a blog post today.

He explains: “We’ve taken a close, honest look at where we do business. We saw that the investment required to bring our technology, tools, and marketplace to every one of our 40 plus countries isn’t commensurate with the return at this point. 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.”

Rich says the layoffs will come from Groupon’s “deal factory” and customer service departments. The company is exiting the Philippines, Taiwan, Thailand, Morocco, Panama, Puerto Rico, and Uruguay.

In August, Groupon ceased operations in Greece and Turkey and before that, it sold a majority stake in South Korean ecommerce company Ticket Monster.

While tough, Rich says these moves are necessary to restructure the business and prepare it for the “next chapter.”

“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,” he says. “Yet just as our business has evolved from a largely hand-managed daily deals site to a true ecommerce technology platform, our operational model has to evolve.”

Groupon launched in 2008, offering bargains and discounts on products and services that were attractive to customers. The novelty and fun of it all made Groupon one of tech’s up and comers, with its 2011 public offer touted as the largest by a US internet company since Google at the time.

However, Groupon has taken a hit as it experienced stiff competition from other deals sites like LivingSocial and OpenTable.

On top of this, a 2011 study by Rich University outlined how deals on these sites have failed to generate business for partner merchants, who in turn, shied away from such services. The study found that roughly 80 percent of customers on these sites are first-timers, and only 20 percent of them turn into regulars.

Reports say Groupon expects the job cuts to be completed in a year.