Bluelight.com Thursday announced a round of layoffs in its marketing and
merchandising departments to streamline operations and improve its
profitability.
It’s an indication Bluelight.com and its parent company, Kmart Corp.,
can’t, and perhaps shouldn’t, keep its online and offline operations
completely separate.
As a private company, it is not required to disclose the number of
employees fired. Dave Karracker, Bluelight.com spokesperson, said
employees were notified Wednesday afternoon and given a generous severance
package and outplacement services. Before Wednesday, there were 194 employees.
“There’s been a slowing in the Internet economy and its not growing at the
rate that everyone predicted, Karracker said. “So, the board of directors
took a look at how to achieve profitability and the easiest way to do that
was to leverage the assets represented (at Kmart).”
Randy Allen, Bluelight.com board of directors chairman, said the ISP model
is sound, and that increased synergies with Kmart will only reinforce its
operations.
“We are extremely proud of Bluelight.com and the results it has delivered
to date,” Allen said. Now, as we move past the first-year launch phase,
the board of directors felt it was important to increase efficiencies, thus
improving operations and recognizing greater economies of scale.”
The free ISP has been in operation since 1999, an online experiment by Kmart to see
if providing free Internet access would bring online customers to its
site. After initial success, it bought out its ISP provider, Spinway, and beefed up its staff.
But while the free ISP was brining in revenues, officials at Kmart were
expecting a profit from its online arm. Bluelight.com quickly instituted a
tiered pay-for-free-access
model, which bought officials some time.
Thursday’s announcement is the latest step by Bluelight.com to increase its
profitability.
Kmart has 2,100 stores nationwide and thousands of buyers who already
specialize in purchasing much of the merchandise peddled at its online
site. But, in order to keep the organizations separate, Bluelight.com
hired its own staff of buyers and marketing reps — an expensive way to
prove the two companies were unique.
Bluelight.com kept many of the employees who specialized in online
retailing and marketing, releasing only those that duplicated the efforts
of the parent company.
Karracker said the decision is one many bricks-and-click organizations are
going to have to make in the coming months. He said a report coming out
from Jupiter Media Metrix “for e-tailors to really survive and excel, they
need to more closely realign themselves with their parent company. Other
than just being a retail channel for them, they need to be a marketing
vehicle for them.”
Bluelight.com will continue to operate out of its headquarters in San
Francisco as a separate company.
