Subscribe to RSSWill LivingSocial Really Overtake Groupon in 2012?
Social daily deal site LivingSocial recently announced that it will overtake Groupon in January 2012, highlighting that they now control $4 out of every $10 of deals sold on either platform.
While I enjoy using both services, my first reaction was to question LivingSocial’s prediction, simply due to the phenomenal success Groupon has seen over this past year. While LivingSocial’s subscriber base may have increased from 10 million to 24 million in three months, data gathered on Compete.com indicates that Groupon is still king, growing unique traffic visitations over 750% while LivingSocial ‘only’ grew traffic by 545%.
Peaking in January after a wildly successful promotion for Amazon.com, LivingSocial saw traffic decline over 33% the following month. Considering that LivingSocial had basically mirrored Groupon’s growth path over the course of the year, a drop off to pre-January levels indicates that the much-publicized promotion failed to attract too many long-term subscribers.
Slower growth rates and lower brand loyalty indicates to me that LivingSocial will struggle to meet its goal to overtake Groupon in 2012, and I believe their statement was simply meant to generate much-needed buzz around the web. While LivingSocial has quite a few unique offerings that set it apart from Groupon, it’s certainly difficult to unseat the top-seeded player! With over 20% of Groupon’s traffic coming from direct referrals, Groupon enjoys a “top-of-mind” awareness that LivingSocial still needs to work hard at to create (currently only 9.4% of traffic to LivingSocial is direct).
Don’t feel sorry for LivingSocial though, the entry of a new major player seems to have been the catalyst needed to grow the social deal space past its ‘early adopter’ period. Groupon has recently become the fifth largest source of traffic to LivingSocial, indicating that consumers have become more aware of social sales and are beginning to “shop around,” visiting both sites in search of deals. A recent report from daily deal aggregator Local Offer Network stated that group buying will grow 138% to $2.7 billion in 2011, and new estimates from BIA/Kelsey optimistically predict sales of over $4 billion by 2015! With this much cash on the table, I am fully expecting to see more brand-building announcements from both LivingSocial and Groupon in the near future.
15 Comments
Do either of these numbers include the auto-firing IFrames from the Meebo toolbar ad unit?
Thanks for asking – this includes all visits and traffic, regardless of source.
I’ve read a lot of articles about how consumers are jumping on the one-day-only-deals bandwagon, but I’ve also come across more and more articles about businesses that have gotten burned by using these deal sites. If enough businesses are negatively impacted (usually financially) but offering deals, will the quality of deals diminish? If that happens, will the consumers bother to check out either?
3 reasons it’s bad for businesses: They aren’t making any money on the “deal” itself, they are attracting mostly deal seekers who are not interested in spending any extra money, and they are taxing their resources with sudden huge influxes of new (non-spending) customers they can’t handle, which often makes for poor reviews and a backlash of lost business. The Groupons are the only ones making out on this business model.
I agree with Nick. I don’t think any of these deal sites are sustainable for businesses, and they will begin to fold as companies don’t sign up, or the deals get worse or repetitive
Also, did you see that Living Social just raised $400 million? http://mashable.com/2011/04/06/livingsocial-400-million-2/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Mashable+%28Mashable%29
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Guess those horrible Super Bowls worked.
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[...] Will LivingSocial Really Overtake Groupon in 2012? [...]
[...] Will LivingSocial Really Overtake Groupon in 2012? [...]
[...] Will LivingSocial Really Overtake Groupon in 2012? [...]
[...] Will LivingSocial Really Overtake Groupon in 2012? (compete.com) [...]
[...] acquired Groupon’s nearest competitor, Living Social, in December 2010. Based on Compete data, Living Social’s subscriber base increased 140% in the last quarter. Its traffic peaked [...]