Living.com, the online furniture and home products vendor, announced Tuesday that it will shut down its operations. The company, which will file for Chapter 7, will be forced to lay off its 275 employees.
The move comes only three months after the Austin, Texas-based company laid off 50 employees and only six months after it signed an agreement to become the exclusive supplier of furniture, bedding, home textiles, decorative accessories and other related products in a new Amazon.com Home Living Store.
Living.com had expected to make payments on the $145 (US$) million deal over five years, but profitability proved elusive.
‘Extremely Difficult’ Decision
Living.com posted a statement on its Web site explaining the closure and apologizing to its customers.
“The decision to close our store was an extremely difficult one,” said Living.com CEO Shaun Holliday. “We assembled a world class employee team, first rate partners and investors, and top tier suppliers. Our Web site is considered the gold standard in Furniture and Home Furnishings online.”
Holliday attributed part of the company’s troubles to current difficulties in raising venture capital.
“Despite our employees’ tremendous efforts and the loyalty of our customers,” Holliday said, “the recent downturn in the capital markets has substantially impaired our ability to raise the capital required to achieve profitability.”
Living.com raised nearly $42 million in its first round of funding, led by Benchmark Capital, and Amazon owned about 18 percent of the company. While Amazon’s role in Tuesday’s announcement is yet unclear, the e-commerce giant insisted that it did not play a role in Living.com’s previous efforts to downsize.
Characterizing the relationship between the two companies, Amazon spokesperson Kristin Schaefer said, “We’re an investor in the company, but we’re two separate companies.”
At the time of the initial layoffs, e-commerce analyst Jim Williamson of International Data Corp. downplayed the cutbacks at Living.com and its main rival, Furniture.com, as simple “bumps in the road.” Williamson told the E-Commerce Times that companies like Living.com had to adjust to a competitive industry that no longer has access to plentiful investment capital.
“Those days are over, so [it’s] time to trim the staffs a little bit,” Williamson said.
Living.com posted an apology Tuesday to its customers. “We regret that circumstances beyond our control have forced us to discontinue operations,” the company statement read. “We are sorry for the inconvenience this may cause you.”