GoPro has announced it has begun to pivot to a direct sale distribution model and cut more than 200 of its staff in response to COVID-19. GoPro will spend the rest of this year changing its model and, although this move seems to have been spurred by the ongoing pandemic, it does not appear that GoPro will reverse its decision after the virus has passed.
Last year, GoPro's website received 7 million visitors and it made around 20% of its revenue online in both the USA and Europe. This has grown in Q1 of 2020 and has been given as one of the reasons for the change in the model.
We've reported on GoPro's undulating finances, including in the past 6 months a fall of revenue of 54% in the third quarter of 2019 and then a bounce-back of 40% in Q4 following the release of its Hero 8 camera. GoPro's shift to a more consumer-direct approach includes the following expense reductions:
- $100 million reduction in non-GAAP operating expenses in 2020 and plans to further reduce operating expenses into 2021 to $250 million
- Workforce reduction of over 200 employees, or more than 20%
- Office space reductions in five geographies
- Sales and marketing expenditure reductions in 2020 and beyond
- Additional reductions in spending across the business
Nicholas Woodman, GoPro's founder and CEO, will forego the rest of his salary for 2020 and the Board of Directors have also volunteered to forego their cash compensation for the rest of the year. Woodman said: "GoPro's global distribution network has been negatively impacted by the COVID-19 pandemic, driving us to transition into a more efficient and profitable direct-to-consumer-centric business over the course of this year. We are crushed that this forces us to let go of many talented members of our team, and we are forever grateful for their contributions."
GoPro says that the change in model will not affect its 2020 releases, which are set to include new hardware, software and subscription products. The move to direct sales is expected to cost the brand $31 million to $49 million.
More information, here