The decline in popularity of flash sale sites has resulted in layoffs at a Groupon-owned company.
Ideel, which Groupon purchased last year for $43 million (when it was called Ideeli), filed notice last week with the New York State Department of Labor that it is going to lay off 39 employees, according to Crain’s New York Business.
Speaking to Crain’s, a Groupon spokesman said that, despite the layoffs, Ideel — which as recently as June was talking of plans for international expansion — will remain in operation.
“We are constantly seeking ways to optimize all of our businesses, and after close examination, we determined there is an opportunity to improve the business’ profitability and operations via this restructuring,” the spokesman commented to the outlet.
As Crain’s points out, Ideel (née Ideeli) enjoyed a rapid rise from its founding by Paul Hurley in 2006, arriving on the scene at a time when flash-sale eCommerce sites were a particular draw for consumers affected by the recession. As the spending economy has increased, however — along with, as Re/code notes, the difficulty in reaching an audience through email promotions and the reduction in availability of excess high-end goods — companies like Ideel (and Gilt, which reached market in 2007) have increasingly struggled. For example, in 2013, Ideel reported losses of $30 million.
The Ideel layoffs are further indication that Groupon itself is finding it necessary to alter its business model in the changing economy, transitioning into a site that is not solely reliant on daily deal promotions. Just last week, the company laid off 20 of the 100 employees from its restaurant POS company, Breadcrumb, at the same time that Breadcrumb’s founder, Seth Harris, parted ways with it.