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?
