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wine.com layoffs - Printable Version

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- 4 Seasons - 01-13-2001 01:51 AM

not sure where this question should be on the board so put it where you please - I heard on Friday that Wine.com just layed off about 75 people and was wondering if there was any truth to it? If there is does anyone have the scoop on whats going on with them?


- Bucko - 01-13-2001 12:03 PM

They claim that they are solvent, but they did indeed lay off 75 people. Below is a report from napanews.com:

Wine.com lays off 75 employees
Napa airport warehouse to be closed

Thursday, January 11, 2001
By L. PIERCE CARSON
Register Staff Writer
NAPA - Belying claims of record-breaking year-end sales, Wine.com, the nation's largest wine e-tailer, kicked off the New Year by cutting 25 percent of its work force.

Included in the wholesale employee dismissal, ironically, was David Harmon, the man who gave birth to the well known domain name.

A spokesman for the Internet wine merchant maintains the work force reduction amounts to nothing more than "typical post-merger consolidation."

The cutback to 220 employees is an attempt to eliminate job duplications created by Wine.com's merger with rival WineShopper.com last summer.

While Wine.com's acquisition of WineShopper.com took effect last November, cutbacks were postponed to avoid turmoil during the busy holiday shopping season, according to Chris Fehrnstrom, vice president and general manager of Wine.com's business-to-consumer division.

"We didn't do anything in late November or December to jeopardize our holiday sales," he added.

In addition to laying off 75 people at its Napa headquarters and technology office in San Francisco in January, Wine.com planned shut down a $5 million state-of-the-art warehouse at 570 Gateway Drive at the Napa airport early this year and consolidate distribution into a second 100,000 square foot warehouse at 125 Mezzetta Court in American Canyon, former home to WineShopper.com.

As part of the cutback, the company will unify operations into a single website, http://www.Wine.com, said chief executive officer Bill Newlands. Additionally, sources indicate, Wine.com may reduce its touted 24-hour customer service, and curtail a live chat line on the website.

"These steps will allow us to serve our customers better and reduce our costs in the areas of shipping, personnel and operations," Newlands points out.

Wine.com grew into the nation's largest Internet wine merchant after start-up Virtual Vineyards purchased the Wine.com domain name from Harmon. The unexpected merger with WineShopper.com was first announced last August. At that time, the two firms employed a total of 400 people. Even with last week's employee dismissals, Wine.com has a larger work force than it did prior to the merger, Fehrnstrom said.

Wine.com officials boast that sales shot up 300 percent last year, with its customer base growing by a like amount. While the privately held firm declines to discuss sales figures, the Register has learned that total sales in 2000 approached $30 million, while salaries had been running the company approximately $2 million a month.

While several of those handed pink slips last week said they clearly understood downsizing, they were troubled by the appearance that a concerted effort is being made to retain employees of WineShopper.com while terminating those who came to the merger from Wine.com. Fehrnstrom said those claims are "false," pointing to the fact that six of the eight members of the management team are from Wine.com.

Harmon, who sold the domain name to Virtual Vineyards for $3.5 million in the spring of 1999, remains one of the major individual stockholders in Wine.com.

Serving as vice president of special events since the firm purchased the domain name he owned, Harmon says he'll continue to receive a pay check until his contract expires in September.

Virtually minister without portfolio, Harmon maintains "the passion that I felt when I first associated with this company is no longer here. The heart and soul of the company is gone. It's totally corporate now. That's why I was told my services were no longer needed -- because I'm not corporate enough."

Harmon said he was "very disappointed with the decision" to terminate someone like himself who believed so wholeheartedly in online wine sales.

"However, it does allow me an opportunity to focus my time on my latest venture, the Wine Radio Network, a syndicated radio program about wine being broadcast in 32 cities at the moment.

"I still want Wine.com to be successful. After all, I'm a stockholder. So I'm still going to be a watchdog."

Wine.com joins a growing list of e-commerce and various dot.com firms that have been scaling back the size of operations. According to a layoff tracker published by an Internet trade magazine, The Industry Standard, Internet firms have reduced payroll by more than 40,000 positions since December 1999. In fact, joining the trend, The Industry Standard laid off 7 percent of its staff earlier this week.

Bucko