Some of main reasons that people shop online, it´s for the convenience, availability, wide range of product selection and lower price. E-commerce the revolutionary way of making business online addresses this factors and companies like Groupon and LivingSocial have identified this hidden potential market and created virtual platforms where discount hunters, can find awesome deals on based on their localities. This type of venture is call contract assurance market that works with a very simple business planLivingSocial has broaden spectrum of deals available for purchase. Unlike its competitor LivingSocial does not require a minimum number of subscribers for the deal to kick in. What is very interesting, once a customer makes the purchase it is provided by a link that can be refer to three other people and if they make a purchase using the link your deal is free.
Groupon sends a daily deal to its subscribers from a local business. There is a threshold that has to be met for the deal to be effective that is a certain number of people will have to subscribe and the deal is becomes active and purchasable. The company will take a cut of the revenue of the deal. This business scheme is very similar to LivingSocial but to set the difference
LivingSocial is Groupon closest competitor taking the lead in the amount of internet traffic for the July 2010 Media Metrix. What it is also interesting as mention in the article is that Groupon remains with the top revenue in the industry. It raises the question. Why LivingSocial with more traffic has not been able to reach Groupon Revenue? It could probably be due the large number of links referred that are available for people to access, or the fact that LivingSocial also counts with an application on Facebook which is a door to five hundred million users. Living Social CEO Tim O'Shaughnessy wants to increase the revenue of the company to 100 million for 2010. Although Groupon growth has been impressive it seems as if it would not bother them to lose the first position in the market. Could that be due to Google’s plan to acquire Groupon?
Considering that Groupon is valued at $ 1.5 billion and that this years it's revenue has been over $ 150 million, I disagree that living social is in any way a competitor. Living social's revenue for this year have been $ 40 million, also very impressive but less than a third of what Groupon made, in fact Groupon is more than three times bigger than LivingSocial. Also Groupon most of Groupon's copy-cats are being bought out by Groupon, meaning that it is spending no time doing the grunt work. It is almost as if Groupon is outsourcing its expansion. LivingSocial is too big to be bought out, yet too small to be a threat. It is likely that most companies will continue to expand. The only way that I believe LivingSocial will be run out of business is if Google decides to purchase Groupon. Of course for now these are only rumors. Both LivingSocial and Groupon offer incentives to invite others therefore the free deal package that LivingSocial offers really doesn't give it an upper hand.As well LivingSocial does not have any particular advantage in offering its deals. Both companies operate under the assumption that their deals will sell because they are great deals. Therefore both need for groups of people to buy their packages, that is the assumption that the business' which offer these packages have, if not no business would agree to the discounted prices.
ReplyDeleteI also strongly disagree that LivingSocial has anything on Groupon and what Groupon has built thus far. While you do mention that LivingSocial eliminates the threshold required for the coupon to be activated, the threshold is always reasonable, usually around 25 need to be bought. Considered Groupon's size and fanbase, I have never seen a Groupon fail to be activated. It also creates an excitement factor to see how early the Groupon tipped, the earlier it did, the more attractive the Groupon usually is. It is also notable that Groupon is what I call all the other deals on these websites. It has become the term for them. I call Living Social's deals "Groupons", and all the competitors deals, I also refer to them as "Groupons". Quite a feat for Groupon, they managed to coin a term that never existed. LivingSocial is a great website, yet I strongly believe it lacks the capacity, strength in numbers, and quality of deals to keep up with Groupon's pace. :)
ReplyDeleteI do believe LivingSocial is a viable competitor of Groupon. Indeed, its revenues are just 1/3 of Groupons but that does not explain the entire story. I believe that LivingSocial with more impressions and reach has the potential to overtake Groupon as the industry leader. LivingSocial only needs to correct the above mentioned aspects to become a viable option for consumers. These include quality of deals and capacity, all of which can be easily remedied. Once LivingSocial changes these aspects, it will already have the needed reach and impressions to broadcast the changes to its constituents.
ReplyDelete