Shakeups

Hungover After an Expansion Bender, Lot18 Pulls Out of the U.K., Lays Off Six

"The supermarkets’ stranglehold on the UK market proved too powerful for us."
 Hungover After an Expansion Bender, Lot18 Pulls Out of the U.K., Lays Off Six

Mr. James (Photo: Lot 18)

Yesterday, Lot18–the members-only site for flash sales of wine–announced in a statement distributed to wine industry publications that it will permanently shutter its U.K. operations, effective at the end of the week. That includes laying off six full-time employees.

Apparently, British oenophiles are hard customers to come by these days.

The statement explains the closing: “The supermarkets’ stranglehold on the UK market proved too powerful for us to compete with and we have not experienced the anticipated growth rate.”

For those keeping score at home, this is not the first time Lot18 has dropped the axe on a significant number of employees. Back in January, the luxe startup let go of 15 percent of its staff–its first stumble following an explosive expansion. At the time, Lot18 CEO Philip James told Betabeat, “A lot of this is a natural part of the way a business grows and evolves.” Think he’s currently eating–or perhaps swigging–his words?

Then, in May, Mr. James (in what a source called “a show of bravado”) began straight-up paying unhappy employees to leave, following the shuttering of its gourmet and lifestyle brands. Seven employees were reportedly so dissatisfied that they took the money and ran. “Lot18 seems to be imploding and the only non-disgruntled employees there are the new ones,” one source told us at the time. “Again, from what I hear you can cut the tension with a knife over there right now.”

Finally, just last month, came another blow to the epicurean e-commerce company. Lot18 once again announced sweeping layoffs, firing 11 of its employees and cutting its food and travel verticals. Mr. James chalked the move up to the fact that the company, which has raised a total of $44.5 million according to Crunchbase, got a little trigger-happy with their cash: “One of the perils of having a lot of money is it’s easy to launch a lot of things,” he told Betabeat.

The closing of the 4-month-old U.K. operation may be another attempt for the company to return to its “core offering…changing the wine business,” as Mr. James told Betabeat back in June. And perhaps Lot18′s platform–with its built-in compliance with local liquor laws–wasn’t as disruptive in the U.K, which lacks America’s patchwork 50-state market.

Lot18 will still continue to operate in the U.S. as well as France, where it acquired Paris-based Vinobest in December. We can imagine it’s a little easier to build upon an already-established business than start from scratch.

Does this signal the end of Lot18′s scaling back, or can we expect more layoffs at its U.S. operations? We’ll keep an ear to the ground.

Lot 18 declined to comment.

If you have any more information, drop us a line: tips [at] betabeat [dot] com.

Additional reporting by Kelly Faircloth.

Follow Jessica Roy on Twitter or via RSS. jroy@observer.com