FAB announces European layoffs and gradually exits from flash shopping

Beijing Time July 31 News, the U.S. Science and Technology information website AllThingsD Tuesday published an article said, the United States Flash-purchase site Fab announced in Europe to lay off more than 100 people, the purpose is to conduct business transformation: gradually withdrew from the Flash business area, and eventually made it into a global network of retail giants.

The following is the full text of the article:

Fab has just made a drastic cut in its European staff, announcing the reduction of more than 100 employees at its Berlin headquarters. Fab said the layoffs were due to the company's strategy of transforming its business into a phased exit from the business model, and then to a model for FAB to keep inventories of its own goods and run global online retail stores.

Fab's time for layoffs is somewhat unusual: only one months ago, Fab announced that it had completed the first part of its fourth round of financing, with a financing amount of $150 million, and that subsequent funding for the round would soon be in place. Fab's number of layoffs accounted for about 15% of the company's 696 total staff.

Nearly 70 employees will leave immediately, while others will remain in the transitional period for several more months. Another 36 employees were asked to transfer their duty stations from Berlin to New York. Jason Goldberg, the FAB chief executive, said in an interview with AllThingsD that the layoffs were intended to eliminate Fab's Jensen Goldenberg model of business replication: Fab actually runs two flash-buying companies, one in Europe and the other in the US.

Beyond that, Fab is stepping out of the Goldenberg and hopes to eventually become a large online retailer selling the same goods worldwide, he said. Goldenberg believes that it is precisely because of this business transformation, so the commodity procurement and marketing and other key functions of the focus on New York is also logical.

"The nature of the Goldenberg is that every day you open a new store and sell hundreds of thousands of products," he said. That's why we have to replicate the exact same business model in Europe. But the best store is to buy it once and it can be sold anywhere, or at once, in any place. Our desire is to become a great global store, so we need to start operating as a global store. ”

Critics may argue that Fab's overly aggressive pace of international expansion, especially the FAB takeover of German web site Casacanda and the UK website Llustre, is also destined for Fab's current forced layoffs.

However, Goldenberg that in order to repel competition from other flash-purchase sites in the European market, Fab must also take the pace of international market expansion. But he acknowledges that the Fab management team has been considering potential layoffs for some time before. But the reason the layoffs were postponed was mainly due to the fact that Fab's own brand business was not yet ripe, and that the current business was already in a certain size, so fab could step out of the flash business.

Goldenberg stressed that Fab will continue to buy and sell goods in Europe in the future, but the size of the procurement team in the European market will be significantly reduced. Fab will continue to retain customer service teams, finance staff, human resources and IT teams in Berlin, as well as fab custom furniture staff.

Fab's job cuts also suggest that for the online retail industry, no matter how much money the service provider can raise, it is hard to build a sustainable, larger and profitable business if it relies solely on the flash-buying business. On the one hand, Fab relies heavily on the flash-buying business, which is why it is now being forced to lay off staff. On the other hand, if Fab had previously opted for a different e-business path, we would not have been able to know whether Fab would have its current brand name.

"We don't think the layoffs mean business failure," Goldenberg said. This is a really sad day for the people who have been cut ... But we also believe that downsizing is the right thing to do in the long-term development of our business. Fab also said that despite the implementation of the layoffs, the company still has more than 70 jobs need to recruit outside.

Goldenberg revealed that in Fab's current fourth round of financing, investors were already aware of the intention of fab to take redundancy measures before signing the investment agreement. Jeff Jordan (Jeff Jordan), partner of Andreessen Horowitz, a venture capital company Horowitz, is a fab director. He said FAB directors fully supported the market strategy developed by Goldenberg.

"Goldenberg's marketing strategy represents the best interests of the company's business development, other employees and investors," he said. ”