Groupon, the operator of daily deals website groupon.com, is talking of eliminating more than a thousand jobs and ceasing operations in several foreign markets, including Panama, Puerto Rico and Uruguay.
Launched in 2008 as a website for companies to attract customers through one-off offers, Groupon is reportedly struggling to compete with giant online retailers such as Amazon and Ebay.
Markets outside North America accounted for about 43 percent of Groupon’s revenue in 2014. The rising value of the US dollar must have played its part in hurting the company’s finances in the foreign market.
Most of the jobs being cut come from sales and customer service divisions. But it is not clear how many people the company employed in Latin America. The restructuring will be completed by October next year.
The LATAM countries where Groupon is popular are Brazil, Argentina and Chile. The deal broker is not exiting these countries. According to a 2011 study from comScore, Groupon attracted the largest audience in Brazil (2.5 million visitors reaching 6 percent of online users) and the highest reach in Argentina (922,000 visitors reaching 7.1 percent) and Chile (481,000 visitors reaching 6.6 percent).
Groupon entered the limelight as it allied with supermarket chains, offering them the opportunity to transform discount buyers into long-term clients. Reports say many supermarkets did not see the clients returning once they walked off with the “daily deal.”
In 2011, a study by Rice University highlighted the difficulty for small and medium-sized businesses using the Daily Deal component of Groupon. Many businesses reported losing money on these offers.
“Practically, this means we’re taking some broad restructuring actions to better focus our resources and streamline our international operations,” the company stated in a separate blog post.
“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. So, we decided to exit a number of countries where the required investment and market potential don’t align.” Groupon has recently exited Greece, Turkey as well India.