Lot18 lays off 35% of staff

New York-based online wine merchant Lot18 has laid off 35% of its staff as it shrinks its business in a bid to turn a profit.

Lot18 founder Philip James

The company announced the redundancies yesterday at its New York office to 25 employees – 35% of its staff, according to technology website AllThingsD.

The cuts affected all areas of the business, including sales and marketing.

“We need to resource according to our new business model and operate the existing business more efficiently with considerably less burn,” CEO Jay Sung said in a statement.

It is the second round of layoffs in the past year for the startup, which has seen the company halve its staff from 90 a year ago to 46.

The company made 10 employees redundant last June when it closed its food division, Lot18 Gourmet, and its food and wine-themed excursion business, Lot18 Experiences, both of which were launched in late 2011.

A month later, it was forced to close its UK operation just four months after launching, blaming the closure on the dominance of supermarkets in Britain.

In a strategy shift, Lot18 is moving from solely operating as a flash sales site selling wine at a discount to its membership base, to also selling wine through a subscription model in order to generate an ongoing revenue stream.

Lot18’s founder, Philip James, is spearheading the launch of the new subscription business.

James is hoping the new initiative will allow the company to scale back on the time and attention that the flash sales business requires.

Despite having just let 25 staff go, he plans to do select hiring for the new venture.

Lot18 recently tested two new subscription services: customers could either sign up to receive six bottles for £60 a month, or 12 bottles for £90 a month.

The company, which specialises in sourcing difficult-to-find parcels and rare single bottles, started selling wine online in November 2010.