LivingSocial local deals
Facebook -- and the internet in general -- may have taken over for bars and cafes as the "third place," but LivingSocial has found a way to get users off their butts and into the doors of local businesses. LivingSocial is a tool that lets enthusiasts review and share movies, books, games, music, restaurants, and kinds of beer. The network, with 60 million users -- 25 million of whom come back at least monthly -- integrates with Facebook and other social sites.
On August 31, LivingSocial launched LivingSocial Deals, an app that alerts members to offers at local businesses. The service started in Washington, D.C., with versions for New York City and Boston in the works. There's one deal a day, on sale for one day only. Merchants can set the price, put a cap on how many coupons they'll offer, and set a time limit for redemption.
For example, a spa that provides hot stone massages for $140 cut the price to $35. The merchant hoped to sell at least 30. In the end, 350 people snapped up the coupons. LivingSocial sends out the coupons, collects the money, takes a cut, and pays the merchant.
"This is what local merchants have been trying to do, whether in the Yellow Pages or on Craigslist," LivingSocial CEO Kevin O'Shaughnessy says. "It's very low risk to them, and they can measure it."
Of course, selling advertising to SMBs is a labor-intensive business. O'Shaughnessy says limiting the promotions to one deal per market makes it doable for his local sales force. Promoting LivingSocial Deals to consumers was easy; the company put the word out via its other social applications.
The question is, will someone who springs for a $35 massage come back again at $140? According to O'Shaughnessy, "Once they're in the store, it's up to the merchant to convert them."
