UPDATED 00:30 EDT / SEPTEMBER 23 2015

NEWS

As the daily deals fad slowly dies, Groupon lays off 1,100 and cuts business in 7 countries

The fad of daily deals sites is slowly grinding to an end with the leader of the pack, Groupon, Inc., announcing Tuesday that they are laying off 1,100 people and closing up shop in seven territories.

According to the Securities and Exchange Commission (SEC) filing, the “restructure” of Groupon isn’t coming cheaply either, with the company disclosing that it will cost them $35 million, including approximately $22 million to $24 million in the third quarter of 2015.

The subsequent spin started at the Groupon Blog, where the changes were headlined as “the next chapter at Groupon” with Chief Operating Officer Richard Williams stating that their goal is to “set the stage for Groupon’s next chapter–as a global company, with more leverage and efficiency in our core operations, and a stronger platform for growth.”

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.

The interesting part is where the cuts are targeted: primarily of the 1,100 job cuts the majority are coming from what Groupon describes as the “deal factory,” newspeak spin for the people at the company who sign up companies to offer deals on the site.

Customer service, ironically the worst regarded part of the company, doesn’t miss the guillotine with significant cuts in that department as well.

The countries Groupon is pulling out of are Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay, and these seven come on top of recent exits from Turkey and Greece.

The fad stops here

While there’s no question that daily deal type sites are still a big business, they are long past peak fad, when they were something people enthusiastically gobbled up.

Whether you argue the idea of buying daily deal offerings is a good one or not is moot, and Groupon has in a large part itself to blame as the leader in the space; dodgy deals, poor customer service when they go wrong, issues with refunds… ask someone on the street if they’ve had one of these issues with Groupon or their competitors, or if they know someone who has, and the answer will nearly always be yes.

The market agreed with the concept that Groupon’s job cuts was indicative of a business in decline with GRPN shares dropping 2.16 percent to $4.08 following the news; of note Groupon floated at $26.11 back in November 2011.

Image credit: groupon/Flickr/CC by 2.0

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