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Tech Industry lays off over 40 percent of staff

The online seller of asthma and allergy relief products lays off 50 workers in an effort to beef up its brick-and-mortar operations.

NEW, one of the first "pure play" online companies to branch into the brick-and-mortar world, has laid off 50 workers, or about 41 percent of its staff, the company said today.

A seller of asthma and allergy relief products, Gazoontite also saw its founder, Soon Chart Yu, step down as chief executive. He is being replaced by former CEO Dan Korn.

Most of the layoffs affected Gazoontite's technology department, as the company plans to beef up its brick-and-mortar operations, Yu said in an interview with CNET None of the layoffs affected employees of the company's brick-and-mortar stores.

"The stores have proven the better value thus far," Yu told a gathering today at the eTail2000 conference here. "The stores are fabulously successful."

In May of last year, Gazoontite's Web site launched, and its first brick-and-mortar store opened in San Francisco. The company also has opened stores in Chicago, Los Angeles and New York and plans to open 20 more next year, Yu said.

Since the e-commerce shakeout began last March, Web merchants have scurried to add more sales channels, through telephone and catalog sales and through the opening of more brick-and-mortar stores.

The benefits of a physical storefront are the same as they always have been, Yu said. Consumers are able to touch and test the products before they buy them, and they do not have to wait for their goods to be shipped as they would if they had ordered them online.

However, San Francisco-based Gazoontite is not abandoning its Web operations, Yu said.

"We have restructured in such a way that we can grow our Internet business in the future. Our Web store is not going away," he said.

Yu said he stepped down because he wanted to find someone more experienced at handling the daily operations of a growing retail company.

"My skill sets are strong in certain areas but not necessarily in the running of a company's day-to-day operations," Yu said. "We wanted someone like Korn, who has led two other companies out of the red and into the black. He's an experienced retailer who can help Gazoontite at this stage of its growth."