Thursday, April 14, 2011

LivingSocial expands in Charlotte

Look out for more localized daily deals in Charlotte, with LivingSocial rolling out more "hyperlocalization" to offer half-off deals at local restaurants, spas, and retail outlets to people who sign up for its contact lists.

The site is similar to Groupon and a host of other daily deal sites that make their money by offering steep discounts in partnership with local merchants. The market for such deals, fueled by the Internet and merchants' desire to draw in new customers during the recession, has exploded into a lucrative, multi-billion dollar affair over the past two years.

Here's how it works: Customers sign up, and the websites alert them to new deals each day. They can buy a coupon for the deal, which usually costs 50 percent or less of the good's face value, and then redeem the coupon with the local merchant. The daily deal company takes a cut of the sale, giving the rest to the merchant.

LivingSocial said Charlotte is one of six markets the company is expanding in, effective Thursday. Although the site has offered deals in Charlotte for some time, LivingSocial said they'll now have more tightly-targeted deals.

"LivingSocial has offered deals in the Charlotte area previously. However, we've found there are certain markets that warrant hyperlocalization," said spokeswoman Maire Griffin, "Meaning deals that are even more focused on neighborhoods. All of our members can manage their subscriptions to receive both Charlotte lists or focus on just one if that fits their life the best,"

The Washington, D.C.-based website recently raised $400 million from investors to fuel its expansion. The company expects more than $1 billion in revenue this year.

Groupon has also been growing rapidly. The company recently completed a $950 million round of financing, and has had discussions with banks about going public with the company valued at $25 billion, according to media reports (like this one). To put that in perspective, Google was valued at "only" $23 billion when it went public in 2004.

Some merchants  (like this one) have criticized the daily deal sites for taking too big of a cut, requiring businesses to spend more than they're prepared to on discounts and training customers to shop only for dramatic discounts. But with the daily deal fervor showing no signs of ending anytime soon, such sites seem likely to remain a permanent part of the local retail landscape in one form or another.


Anonymous said...

LivingSocial is awesome, it has brought back date night for me and my wife! Keep the great deals coming!!

Anonymous said...

Other than Groupon and LivingSocial, what are the other local deal-of-the-day sites?

Anonymous said...

I like the restaurant deals, and the Amazon one was awesome!
But when I tried to sign our shop up to participate, they said it wasn't the kind of place they wanted to promote. Still, they had two others with the same service within a couple of weeks.

Anonymous said...

I agree. Too bad companies like Charlotte Citipass don't follow that example. The bad and closed merchants in this year's book is a real joke. Ever notice all of the restrictions like Mon-Thu or buy 2 drinks to qualify. Much better coupon books in Charlotte that provide local and national merchants.You also have to pay for online access through Citipass when the other books and websites allow you to print deals for free.

Lotte said...

@anonymous 4:57 -- be careful what you wish for. My husband's small cleaning business was featured on Charlotte Groupon last year. It was an absolute nightmare.

What Groupon's very careful not to tell you is that they pay their merchants less than 25 cents on the dollar of a deal's "take." They keep the rest, which is why they are so flush with cash. And they pay that out over several months, so you have to keep the customers happy for them to keep meting out your checks.

Meanwhile you are swamped with a wave of new customers that fill your schedule to the point where you don't have time for your full-price customers. Most of these people are nice, some even tip, but a significant minority are cheap (*&^#$'s who want the sun, the moon and the stars for that less than 25% of an already deep discount.

This subset can wear you out. Instead of new regular customers, you have frustrated bargain-hunters who not only won't come back --they will tell everyone they know you s#ck.

Then that check looks even more meager...

If you do decide to do a deal like this, please be careful. Make sure everything is in writing up front, have your attorney look at it, and consider reasonable limits and restrictions on the deal. It can be a real win-win for merchants if done right, but you have to be careful.

Anonymous said...

Livingsocial has such better deals than Groupon and I hear they take much better care of their clients! Live Social and have some fun.

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