TakeAway: Today, LivingSocial — the No. 2 player in the rapidly expanding market for online discounts — is still David battling Goliath (i.e. Groupon).
But the great chasm between the companies is narrowing, as the upstart gains more subscribers and collects more cash. At the same time, it is trying to differentiate its brand.
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Excerpted from the NYTimes, “In Race With Groupon, LivingSocial Raises $400 Million” By Evelyn Rusli, April 4, 2011
In recent months, LivingSocial, which like its larger competitor serves daily deals to subscribers based on their location, has started to roll out new features. LivingSocial Instant, a mobile application that delivers time-sensitive discounts to users on the go, is a product that is currently only available in the Washington, D.C., area, where the company is based. It has also introduced Escapes, a dedicated page for travel deals, an area on which Groupon has not focused heavily.
In its marketing campaigns, the company retains a youthful attitude with an “approachable sophistication,” said the company’s vice president for marketing.
Since the beginning of 2011, LivingSocial’s staff has roughly doubled to 1,300 employees, scattered across 250 markets in about a dozen countries. The number of LivingSocial subscribers now exceeds 26 million, about a third of Groupon’s audience.
One deal in January, a national promotion for a discount Amazon gift card for $10, attracted 1.3 million purchases in one day, or about $13 million in sales. Those returns surpassed Groupon’s first national deal with Gap in August, which generated about $11 million. By the CEO’s estimates, LivingSocial is on track to reach 400 markets in 2011, with a staff of 3,000 people. In the last few weeks, he has also doubled his revenue goal, to $1 billion.
But as LivingSocial’s statistics climb, some analysts warn the industry may not have a big upside over the long term.
Several local vendors have publicly expressed dissatisfaction with daily deal services, which often attract discount-seekers instead of repeat visitors.
Edit by AMW