May 23, 2000 12:45 PM PDT
Living.com lays off 50 to cut costs
The Austin, Texas.-based home furnishings e-tailer, which launched a permanent store tab on Amazon.com last week, laid off 50 workers yesterday.
Employees from all departments in the company's Austin, New York and North Carolina offices are affected, chief executive Shaun Holliday said. The layoffs, which included some executives, were part of an effort to "streamline" the company's operations, he said.
"Clearly the new economy demands that we reach profitability at a much earlier stage," Holliday said. "That's what's really behind this."
E-business software maker J.D. Edwards yesterday announced that it was cutting 800 jobs, or 13 percent of its workforce. In the last two weeks, toy e-tailers KBkids.com and Toysmart.com also announced job cuts and executive departures; Toysmart ended up shutting its doors for good on Friday.
The layoffs come as sour stock markets have hit e-commerce and other Internet sector stocks particularly hard. Market conditions have also caused fewer companies to complete initial public offering plans. Without the cash infusion of an IPO, private companies now have to be more judicious about spending their venture funding.
Living.com raised about $42 million in its first round of funding led by Benchmark Capital. Amazon owns about 18 percent of Living.com, although the e-commerce giant has not disclosed how much it has invested in the company. Holliday said Amazon did not play a role in Living.com's decision to make the job cuts.
Amazon spokeswoman Kristin Schaefer echoed Holliday, saying Amazon did not influence the Living.com layoffs. "We're an investor in the company, but we're two separate companies," Schaefer said.
But Schaefer said Amazon is not concerned by the layoffs. "They are a great partner for us," she said. "We're committed to working with our partners to help them be more successful."
Some of the cuts at Living.com will come from its fulfillment and customer service centers. Although the company has already seen its orders double since it launched its store tab on Amazon, Holliday said the cuts will not affect its ability to handle orders.
"We have staffed up dramatically to meet the Amazon business that we are expecting to get," he said. "In building out the business, we probably overstaffed in some departments in order to build this business rapidly."
Holliday declined to say which executives the company laid off. Living.com offered the terminated employees a severance package, though Holliday declined to outline the specifics of the package.
The layoffs at Living.com follow similar job cuts at home furnishings rival Furniture.com. Last month, Framingham, Mass.-based Furniture.com cut 29 jobs, or about 12 percent of its workforce. Like Living.com, the company, which has filed for but not completed its IPO, attributed the job cuts to an effort to reach profitability.
Such layoffs at Living.com and Furniture.com are simply "bumps in the road" for companies in a competitive industry, said Jim Williamson, an e-commerce analyst with International Data Corporation. Although both companies could recover, Williamson said they are reflective of the current investment market.
Companies like Living.com increased their staffs when investment money was plentiful, Williamson said. "Those days are over so time to trim the staffs a little bit," he said.