Groupon announced Monday that it plans to cut almost 3,000 jobs as the coronavirus crisis continues to cripple small businesses that use Groupon to offer deals and discounts.
Groupon said in a filing with the SEC that it plans to terminate or furlough approximately 2,800 employees, the majority of which will take place during the second quarter of this year. Last week, Groupon announced it furloughed “significant portions” of its sales and operations teams.
March was a particularly challenging month for Groupon. Its "Local" business declined 49% year-over-year in North America and 52% year-over-year in its international markets, the company said (Groupon's Local category includes dining, retail and deals for other local merchants). Groupon estimates that April's month-to-date Local unit performance in North America is down more than 70% and International is down over 80%.
"The restrictions on everyday activities around the world have resulted in significant disruption of the company’s operations," Groupon said in the filing. "The company’s business relies on customers’ purchases of vouchers for local experiences, including events and activities, beauty and wellness, and dining. The temporary closure of businesses including restaurants and bars, event venues, and spas, resulted in a material deterioration in the company’s performance in March 2020."
Groupon is also tweaking a previously announced plan to discontinue its "Goods" category, where it offers items like toys, electronics and other physical products. Groupon planned to exit the Goods market to focus on local experiences, but with much of the country in lock-down mode and its Local category taking a hit, the company said it now intends to phase down the Goods category and shift towards a third-party marketplace model where merchants assume the responsibility for fulfillment and returns, rather than exiting the category completely.
Groupon, which was born during the 2008 recession as cash-strapped Americans turned to the company for local deals, now faces one of its largest challenges to date as the country prepares for another economic hit. But once the country's small businesses re-open, Groupon believes it has the potential to drive traffic to local merchants when they'll need it the most.
"The company believes local merchants, who are facing unprecedented declines in their business, should need the services of Groupon more than ever," the company said. "Given the Company’s ability to highlight merchants and the deals they are willing to offer, and attract customers who buy a deal today that they are willing to use tomorrow, the company believes it will have a unique opportunity over the next several quarters to attract high quality merchants and customers back to its platform."
