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LivingSocial is laying off 160 employees

March 16, 2016 04:38 PM
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LivingSocial is laying off 160 employees as it shifts to a U.S.-based outsourcer from an in-house call center to handle customer service inquiries.

The move is part of a broader turnaround strategy for the company, which gained recognition for its multicategory, multicountry voucher-based business, in which consumers pay for discounted goods or services. LivingSocial says it aims to become a North America-based marketplace that focuses on “experiential categories” such as restaurants and vacations.

A second call center is set to close in May, resulting in 120 more layoffs. Since 2014, almost 900 LivingSocial employees have been cut.

The transition has not been easy, says president and CEO Gautam Thakar. “It has been a tougher journey than I would have liked, but we have remained focused over the last year on the initial goal of being break-even in our voucher business,” he says. “We have aggressively sought operational efficiencies through simplification, automation and outsourcing, culminating in the completion of the initial phase of our turnaround today.”

At the same time, LivingSocial, No. 206 in the Internet Retailer 2015 Top 500 Guide, has been testing products, such as Restaurants Plus, a program that lets consumers link a payment card to a LivingSocial account to enable them to earn cash-back credits when they make a purchase from designated merchants. The program has generated high adoption from restaurants and positive early feedback from consumers, LivingSocial says. The program demonstrates how LivingSocial is shifting away from vouchers, Thakar says.

“As a smaller organization, we will focus on scaling our card-linked offer initially in the restaurants category, before adding other categories,” he says. “While it is never an easy decision to say goodbye to talented colleagues, we believe we are now in a more stable position to invest in the next phase of our journey.”

As LivingSocial shifts from selling vouchers, its business of selling merchandise has also struggled. LivingSocial sold an Internet Retailer-estimated $138.4 million in merchandise in 2014, according to the Top 500 Guide, down 20% from $173 million a year earlier. That stands in sharp contrast to its rival Groupon Inc., No. 30 in the Top 500 , sold $1.366 billion in merchandise last year, up 24.5% from $1.097 billion a year earlier.

Amazon.com Inc. (No. 1 in the Top 500), owns a 31% stake in LivingSocial.

 

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