Digital currency site Beenz said Tuesday that it is laying off 25 employees from its New York City and San Francisco, California offices and will close some of its other offices.
The company said that the cuts came after an in-depth analysis, including a strategic review of its global business operations.
Although Beenz did not say which offices it would close, published sources referred to a memo from chairman Philip Crawford that reportedly said the company willbe “closing marginal and non-strategic operations.”
Beenz employs approximately 260 people worldwide in its New York City headquarters and operational centers across North America, Europe and the Asia-Pacific Region.
When Beenz launched in March 1999, chief executive officer Philip Letts said, “Beenz will erase international borders and will help Web sites to offer global Beenz incentives to loyal customers. Twenty Beenz in the U.S. equals twenty Beenz in Europe, Australia and anywhere there is access to the Internet.”
Beenz — and its chief competitor Flooz — launched with high hopes of revolutionizing e-commerce by offering alternative digitial currencies that could be spent at e-tail sites.
The chief difference between Beenz and Flooz is that while the Flooz currency can be purchased outright, Beenz currency has to be earned by filling out surveys or clicking on Beenz icons hidden on retailer sites. The earned Beenz can then be spent at any Web merchant that accepts Beenz.
Despite optimism that Beenz and Flooz would establish a global currency, the companies have faced stiff competition from credit card companies. Major players in the credit card industry, including MasterCard, American Express and Visa, have been busy promoting how safe it is for consumers to use their credit cards online and have been offering incentives to encourage such use.
American Express has gone so far as to offer consumers disposable credit card numbers that are only good for one transaction. Other initiatives include smart cards that support secure identification information.
Adopting the attitude that “if you can’t beat them, join them,” Beenz cut a deal with MasterCard to develop a Beenz-backed MasterCard that will be accepted by any Web merchant that takes MasterCard.
As if often the case when a company cuts workers and closes offices, Beenz is emphasizing revisions to its business model. The company says it plans to concentrate on developing its BeenzCodes reward program business.
BeenzCodes are unique codes issued to consumers at the point-of-sale, inside product packages and in direct mailings. Consumers log on to the Internet to redeem the codes for Beenz, which can then be used at merchants that accept Beenz.
Company spokesperson Glenn Jasper told the E-Commerce Times that Beenz had not consummated any deals yet, but is negotiating with several companies and is “happy with the way things are going.”
Although Beenz is touting revised business models along with its announced layoffs, research indicates that many dot-com companies that hand out a set of pink slips eventually close. According to data released in July by Chicago, Illinois-based outplacement firm Challenger, Gray & Christmas, a high percentage of dot-com companies that announce layoffs later close shop.
Even so, the decision to offer BeenzCodes offline for redemption online could be a positive step for Beenz. Consumer product companies such as Pepsi and others have developed marketing campaigns that allow consumers to log on to the Web and redeem for prizes the codes they find on products.
In related news, although evidence points to the demise of alternative digital currency systems, at least one country is planning to make e-money a national standard.
Singapore announced on Tuesday that e-money will be legal tender by 2008 and that merchants will be obligated to accept payment exchanged electronically via mobile phones, hand-held computers and other devices.
“If you want to give it to your kids for pocket money, you pass it on to them by phone. They can use it for bus fare, or the school cafeteria — or whatever,” Low Siang Kok, currency director at Singapore’s Board of Commissioners of Currency, said in published reports.