While the layoffs among dot-coms have been widely reported, two studies last month-one by Getzler & Co. of New York and the other by Challenger, Gray and Christmas of Chicago-reported that retailers account for the bulk of layoffs. In the Getzler study, 52 of 119 b2c companies with layoffs were in retailing. Most were responding to the new dash of realism that skittish investors brought to the market. While some of the layoffs were the result of the completion of projects, most were the result of companies’ downsizing or going out of business.
Support staff, site developers and programmers were the most common job categories cut, says Brian Mittman, vice president with Getzler. But, if a product line was eliminated, the cuts included employees in all functions associated with that line.
The Getzler study looked at 150 troubled Internet companies which accounted for more than 10,000 laid-off workers. Getzler studied companies that had been the subject of news reports or had submitted press releases about restructuring. The study not only looked at layoffs, but also at subjects like changes in strategy and changes in marketing expenses. Getzler researched media reports, company releases and any other sources it could find in the public domain, and it interviewed company executives. Getzler also examined Internet service providers, software companies and incubators.
Amazon.com experienced a fine-tuning, laying off only 150 of its 7,500 employees. ValueAmerica.com laid off the largest percentage of its workforce (50%), after it narrowed its focus from selling a full line of products to electronics only; in mid-August it filed for Chapter 11 Bankruptcy and discontinued its retail business. Furniture.com laid off 40%; KBKids.com and CarOrder.com; 30% each.
Getzler will use its data to start a database of restructuring activities by dot-coms. The firm plans to continue tracking troubled Internet companies.
A study by outplacement firm Challenger, Gray & Christmas-its second such study-looked at 122 dot-coms that cut staff. Challenger reports that 20% of those cutting job went out of business; 7,592 jobs were cut between December 1999 and July; and e-retail companies were the hardest hit, accounting for 24% of the cuts since December. “The big-box players are the ones having the best chance of making it in web-based retailing,” says John A. Challenger, CEO of Challenger, Gray & Christmas. “Big boxes have the means to draw the traffic.”
Most of the struggling companies are niche-market dot-coms, he says. The buying public is probably not yet ready to buy niche commodities like pet supplies online, he contends.