LivingSocial yesterday confirmed it had closed down operations in the Middle East and will exit the market after just one year of operation.
The daily-deals giant said it would try to retain some employees in the region, but was shutting up shop and investing in other regions around the world where there was greater opportunity for growth.
“At the beginning of 2012, LivingSocial laid out its strategic plan. We continue to aggressively execute against that plan by focusing on areas with the greatest opportunity for growth and profitability,” the company said in a statement on Wamda, a website and funding platform for entrepreneurs.
“As a result, LivingSocial will suspend its Middle East operations and direct company resources to other regions. All LivingSocial [Middle East] merchants will receive their payments, and we are working with them to ensure all outstanding vouchers will be honoured. Should any LivingSocial ME members or merchants have questions, we encourage them to contact us at email@example.com.”
It was revealed in The National this month that LivingSocial was considering exiting the region and had been trying to sell its email database of 750,000 subscribers in the UAE, Egypt and Lebanon to a third party.
Headquartered in Washington, LivingSocial entered the Middle East market last year through the acquisition of the regional deals site GoNabit for an undisclosed sum.
Brendan Lewis, the director of corporate communications for LivingSocial, said the company hoped to retain the GoNabit founding team, Dan Stuart and Sohrab Jahanbani, and redeploy all current employees within the global LivingSocial network where possible.
“We hold Dan and Sohrab and the leadership at LivingSocial Middle East in very high regard,” he told Wamda.
Mox Deals, based in Düsseldorf, last week said it was looking to buy the LivingSocial subscriber base in the Middle East but it is unclear whether the US company sold the asset.
Eric Eichmann, the president of LivingSocial’s international operations, outlined the reasons why the company was closing down the business in an email sent to employees last week.
“Unfortunately, despite the aggressive efforts of our employees in the region, we have not been able to get our [Middle East] operations on a path to sustained profitability, and so we are looking at other options in those three countries,” he said.
LivingSocial’s staff based in the region is thought to number about 90.
Mr Stuart, the chief executive of LivingSocial Middle East, could not be reached for comment but has said vouchers already paid for by customers would be valid with merchants until the expiry date.
“Our terms haven’t changed for the last two and a half years,” he said. “Once someone buys a voucher on our website, the issuer of the voucher is the merchant and, as the issuer of the voucher, the merchant is responsible for delivering the service. Obviously, the voucher is always valid up until the point that it expires and the expiry date is on the website and on the voucher too.”
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