The 100 planned layoffs in Europe come as the retailer shifts away from flash sales.
Stefany Zaroban , Associate Director of Research
Design-inspired products e-retailer Fab.com plans to lay off more than 100 workers in its Berlin office as the merchant reshapes its business into a traditional e-commerce model and away from flash sales, CEO Jason Goldberg wrote in a blog post today. The layoffs comes a month after Fab announced it had secured $150 million in funding to “fuel the next phase” of its business.
European customers will not experience a disruption in service, Goldberg says, but 100 positions will be eliminated “due to redundancy.” Fab will maintain local customer service, returns, shipping and logistics, finance, information technology and human resource functions in Europe at its offices in Berlin and Eindhoven, Germany. Also, Fab’s custom furniture line, launched earlier this year, will continue to operate out of Berlin.
“Fab remains 100% committed to the European market and the Fab Berlin office will continue to support our growing [European] presence with a more tightly focused team in place,” Goldberg wrote.
Fab.com was built on the flash-sale e-commerce model—a limited number of hand-selected items were listed on the site for a short amount of time. Launched in mid-2011, Fab.com has grown online sales to an Internet Retailer-estimated $150 million in 2012. Goldberg has said more than 30% of its revenue comes from Europe.
However, maintaining fast and free shipping remains a challenge with this model, as the merchant had thousands of products from new brands coming in and out of its warehouses each day, Goldberg says. Fab.com essentially ran two separate flash-sales businesses, one in the United States and another in Europe, he adds.
The company is now shifting to what it calls an “inventory planning” model, in which it stocks products in its own warehouses for extended periods of time. “We are building a scalable model that allows us to sell the same products simultaneously everywhere around the globe,” he wrote. “That was hard to do with flash sales as products would come and go from Fab daily; the nature of flash sales dictates that products are not kept in inventory and are thus very difficult to ship fast or for free.”
Over the last year, Fab.com has invested millions into adding inventory and building its first fulfillment center in Edison, NJ, that it dubs “The Rack.” A second facility is also planned in Las Vegas.
Following the layoffs, Fab will have more than 600 employees, Goldberg says. All merchandising, marketing and operations teams will have their hub in Fab’s New York City offices, and the e-retailer plans to double its engineering team and add on to its sourcing and planning departments. Fab has asked more than 30 people in its Berlin office to move to New York.
Fab.com is No. 150 in the Internet Retailer Top 500 Guide.