May 23, 2013, 9:43 AM

E-retailer Totsy.com will lay off all its employees

The flash-sale merchant increased sales last year by 75%.

Lead Photo

CEO Lisa Kennedy

Flash-sale e-retailer Totsy.com plans to lay off all of its 83 employees by May 31, according to a recent filing with the New York State Department of Labor. The document classifies the reason for the layoffs as a “plant closing.”

The move comes just more than a month after the online private sale site for kids’ and moms’ clothes and accessories replaced its CEO.

Totsy, founded in 2009, this year broke into Internet Retailer’s Top 500 Guide at No. 457. Its 2012 sales increased 75% year over year to nearly $24 million. The e-retailer claimed 5 million members. 75% of its shoppers last year were return shoppers, according to the guide.

Totsy is the 27th fastest-growing e-retailer in the new Top 500 Guide. The e-retailer also ranks No. 4 in the 2013 Social Media 300, which measures online retailers by the percentage of traffic to their sites that comes from social networks.

Totsy provided no immediate comment about a report from PandoDaily.com that the e-retailer has “entered liquidation.” The Totsy.com e-commerce site today still was taking new memberships, and its customer service lines remained open, though a recorded message warned about heavy call volume.

In April, Guillaume Gauthereau, who co-founded Totsy.com, resigned and was replaced by Lisa Kennedy. She came from Hopscotch.in, an Indian flash sale site she founded last year that is similar to Totsy. She had previously worked at Amazon.com Inc.-owned Quidsi Inc., which operates such sites as Diapers.com and Wag.com. Amazon.com is No. 1 in the Top 500.

In January, Totsy bought competitor Mamasource.com.

This is not the first time layoffs have hit flash sale retailers. In January 2012, Gilt Groupe Inc. (No. 54 in the Top 500) laid off 10% of its workforce—about 90 employees at the time—and lost two of its executives.  An initial public offering is expected this year for Gilt.

Meanwhile, another flash retailer—One Kings Lane (No. 120 in the Top 500)—last year branched out and debuted an online marketplace where dealers of antiques and vintage products sell merchandise directly to the site’s members. And just last month, two-year-old home furnishings flash e-retailer Foundry.com ceased operations as a stand-alone site and became part of its parent company’s e-commerce site, Hayneedle.com (No. 84). The change came amid sharply declining site traffic to Foundry.com.

It’s unclear whether the Totsy layoffs signal any further changes for the flash sale space.  “I think the expectations for these businesses are very high, so it's going to be hard for them to keep growing,” says Forrester Research Inc. analyst Sucharita Mulpuru-Kodali. “I think they need to get to profitability which means cutting a lot of costs (headcount) but that would also significantly cut growth.” 

 

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