Another Groupon rival pulls back on deals effort

Reuters News
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Posted: Jan 13, 2012 1:23 PM

By Alistair Barr

SAN FRANCISCO (Reuters) - Online retailer Rue La La, has stepped back from its Rue Local daily deal business, the latest Groupon Inc rival to hit trouble.

Rue Local, which offered daily deals in cities including New York, Los Angeles and Washington D.C., is outsourcing its sales force to another company, a spokeswoman said on Friday. She declined to identify the company.

Smartbargains.com, another business run by Rue La La, will be consolidated into the main company, she added.

The changes resulted in an 11 percent reduction in jobs at Rue La La, which is part owned by eBay Inc, the spokeswoman said.

Several Groupon rivals have ratcheted back efforts to compete in recent months. Part of the problem is that the creation of daily deals involves hiring a large and costly sales force to contact merchants and negotiate discounts.

Facebook ended an early attempt at daily deals last year and Google outsourced the creation of deals to other daily deal companies. Yelp reduced the number of deals it offered.

Rue La La's main business is flash sales, which are heavily discounted online sales of high-end apparel and other items for limited time periods.

The company "has continued to see dramatic growth with nearly $300 million in sales in 2011 and similar growth planned for 2012 and beyond," the Rue La La spokeswoman said on Friday.

(Reporting By Alistair Barr; Editing by Steve Orlofsky)