Co-operative buying website Letsbuyit.com made around 200 of its 350 staff redundant on Wednesday.
vnunet.com understands that the axe will fall on 10 of the firm's 14 European operations, leaving offices only in Stockholm, Paris, Munich and London.
A statement posted on the company's website today said: "In view of the present situation Letsbuyit.com NV cannot but close a number of country operations and lay off a considerable number of its present staff. Out of the 350 existing staff, around 200 employees are expected to be made redundant. Further details related to this redundancy will today [Wednesday] be made known to the employees."
At a meeting today, staff at the company's London office were told that some parts of the website would be discontinued and that there would be some redundancies, with those losing their jobs due to be told next week.
Around a third of the firm's London staff have already left since the start of the month or are planning to do so, according to sources.
The closures are far more severe than indicated last week by investor Kim Schmitz, founder of the Kimvestor investment group, who warned that just four of the firm's 14 European offices would close and that the restructured group would concentrate on its UK, French and German offices.
Kimvestor, which along with existing investors guaranteed Letsbuyit's administrator's costs of 4m euros, has promised up to 50m euros more for the website by the end of February. Letsbuyit's management is currently talking to investors after narrowly dodging bankruptcy last week.
John Palmer, Letsbuyit's founder and acting chief executive officer, has said previously that he needs 40m euros to take the company through to profitability. He indicated that he would do this by cutting the company's burn rate - the amount it loses each month - from 8m to 2.5m euros initially, and then to 1m euros before reaching break even point by the end of 2002.
But analysts have said that the firm makes a loss on practically every sale and that Kimvestor's cash boost does not change this fundamental problem. They also believe that even Kimvestor's proposed 50m euros may not buy the company's management enough time to turn Letsbuyit's fortunes around.
Some 182m euros has been invested in Letsbuyit to date.