April 5, 2013, 6:08 PM

Language-lesson retailer Rosetta Stone closes kiosks to focus online

It also acquired online language course provider Livemocha this week.

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Between the mall stand that offers strolling shoppers cell phone accessories and the one that sells calendars for all occasions, a hole has appeared. Rosetta Stone Ltd., seller of language-learning programs and a long-time pop-up fixture in malls and airports, has closed the last of its remaining U.S. kiosks, 56 in total, it announced yesterday.

The move is part of the retailer’s increasing focus on selling language lessons that consumers access via the Internet as opposed to in CD format, the retailer says. That shift began 18 months ago and has been accelerating for the last half year, a spokesman says. Earlier this week Rosetta Stone acquired Livemocha, a provider of online language courses, as part of its drive to focus on the Internet as its primary selling channel, he adds.

“Not long ago, kiosks played a critical role in building our brand and distributing our products,” says president and CEO Steve Swad. “But today, learners expect us to come to them via the cloud, and that’s what we’re doing.”

The retailer announced Monday it had acquired Livemocha for $8.5 million in cash. Livemocha, which has 16 million global members, sells online courses and practice tools for learning 38 languages, Rosetta Stone says.

Rosetta Stone will use Livemocha to migrate its legacy products, such as CDs, to an Internet-based model quickly and to provide a more modern method of distribution, says West Stringfellow, chief product officer at Rosetta Stone.

When the two businesses are fully merged, Rosetta Stone will be able to offer customers a larger range of prices, products and services, the spokesman says.

Closing the remaining kiosks will also allow the retailer to invest in more profitable marketing for the web, mobile and social media, the spokesman adds.

Rosetta Stone has closed more than 100 kiosks since 2011 in response to their dwindling sales numbers, it says. Meanwhile, online sales have tripled in the last few quarters, the spokesman says. On the institutional side of the business, which includes sales to schools, corporations and public sector customers, 99% of sales are online, he says.

Along with the kiosks, Rosetta Stone is also shedding about 45 full-time and 200 part-time employees, it says. “This is the right move for Rosetta Stone and it sets us up for long-term growth,” Swad says of the layoffs. “It makes us a more nimble and innovative cloud-based learning company.”

Retailers including Amazon.com Inc., BarnesandNoble.com Inc., Best Buy Co. Inc., Costco Wholesale Corp., Staples Inc. and Books-a-Million Inc. still sell Rosetta Stone’s wares in stores and online, Rosetta Stone  says. Its full product suite consists of digital downloads, online subscriptions, mobile apps and CD sets.

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