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Why Groupon Wants to Maintain a Smaller Creative Team

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Layoffs tied to shift in marketplace model

Groupon (GRPN) laid off some employees in its creative services team last month. The company eliminated ~20 jobs from the team, according to a report from Chicago Business. Groupon started off as a company that helps people discover daily shopping deals by sending deals to subscribers’ email accounts. In recent years, though, Groupon has shifted to a marketplace model, whereby it seeks to draw people to its website instead of following them with emails about shopping discounts.

According to Groupon, as a result of its shift to a marketplace model, its needs and expectations for its creative services team have changed—hence the decision to shrink that team.

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Groupon’s expenses decreased ~10%

Although Groupon has removed fewer than two dozen jobs from its creative services team, the layoffs show another attempt by the company to keep its costs under control. Groupon’s operating expenses fell ~10% YoY (year-over-year) to $304.2 million in the fourth quarter. In contrast, operating expenses rose 18% YoY at Amazon (AMZN) and 54% YoY at Etsy (ETSY) in the quarter. JD.com (JD) recorded a 22% YoY increase in expenses, while eBay’s (EBAY) operating expenses were mostly flat in the quarter.

Groupon posted a $46.2 million profit

Better cost controls saw Groupon post a profit of $46.2 million in the fourth quarter despite its revenue falling 8.0% YoY in the quarter. Groupon’s top line has generally been on a downward trend in recent quarters, as illustrated above, as the company has focused much of its attention on improving its bottom line.

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