Daily deals web site and Groupon rival LivingSocial has raised a mind-boggling $400 million in a new round to take its total funding to over half-a-billion dollars.
Well, $600 million is LivingSocial’s total funding if you schmucks must know the exact number.
Existing investors Amazon and Lightspeed Venture Partners and newbies T. Rowe Price and Institutional Venture Partners ponied up the money (Source: NYT).
In the NYT’s calculation, the deal values LivingSocial at over $3 billion.
The money will go toward fueling the company’s frenetic growth in domestic and international markets.
We have never used LivingSocial although we’ve tried Groupon a few times.
Conceptually speaking, all these deal sites are the same.
You get 50%-70% of retail price for a meal, eye test, Yoga classes, Botox injection, a vacation or for a thousand other such services or products.
LivingSocial boasts of 26 million members in 206 daily deal markets and 46 Family Edition markets. Its larger rival and deals Goliath Groupon has 60 million subscribers.
Washington DC-based LivingSocial plans to expand to 400 markets by the end of 2011.
LivingSocial recently rolled out Instant Deals in Washington, DC to offer consumers immediate deals at restaurants and attractions within a half mile radius via their LivingSocial mobile app. Merchants get the flexibility to drive business when they need it most.
Look out for Instant Deals in other markets in the coming weeks.
What the Future Portends
Deals, while they satisfy the restless cravings of a gluttonous rabble, are obviously not good for the retailers’ bottomline.
Also, we doubt there’s an opportunity for so many coupon peddlers.
The shakeout is coming sooner than you think.
Deal is not a deal if you are getting it daily. This is just another trick by the companies to deceive gullible mind to spend more.
Remember, they’re all deals from different businesses.
But it’s working. A local Pizza chain had a $12 for $24 yesterday (no, we did not buy) and when we checked around 11PM or so last night some 1,680 people had purchased it. Go figure!
I guess people are buying it because they are getting it for cheap (whether they need it or not). I get daily email from groupon on 50% discount on few restaurants. Sometimes I just get tempted to go there, not because I wanted to, but because I get a 50% discount.
We think it’s bad for retailers, most of whom are desperate.
NYT had an interesting piece recently:
Is Groupon Ruining Retailing?
Here’s an earlier piece:
Doing the Math on a Groupon Deal
Thanks for the links. Just read them.
With more and more companies jumping into these group discounts area, I guess the percentage that goes to the company will go down and the businesses will get higher percentage. Now its almost like a monopoly. Two, three years down the line when the businesses have enough groupon type options to advertise, they might choose the one which is reasonably popular and cost effective.
Also, even these companies by this time will be aware that businesses are not profiting from these deals. Even they have to be in business. So I guess they will come with some mutually beneficial strategy where everyone wins.