March 9, 2011, 2:53 PM

LivingSocial aims to bring merchants' dead hours to life

Why LivingSocial's Instant Deals are a good deal for local merchants.

From The Olive Garden to Outback Steakhouse to Lone Star Steakhouse to The Pancake House (original name, huh?), I did my fair share of serving up grub throughout my high school and college years. Heck, it beat donating plasma. Therefore, I am all too familiar with the infamous dead hours—those awkward in-between-meal hours, say, between 2 p.m. and 5 p.m., when I was paid $2.15 an hour to stand with the rest of the wait staff, slurp down free soda and attempt to sneak breadsticks.

I can only imagine how happy restaurants (and their servers who stand around folding napkins sans tips) would be if there were a way to drive more business through the doors during these periods. And, if you think about it most local establishments have this issue. I’d venture to say most neighborhood accessory boutiques aren’t exactly slammed on a Tuesday at 11 a.m. and I know from experience that the nail salon near my work is packed over the lunch hour, then dies down at around 2 p.m. only to pick up again around 5 p.m. for the after-work crowd. I can’t think of much that could be more frustrating for a small business than having to pay employees every day for several hours when they have little more to do than play Sudoku. 

That’s why I think LivingSocial’s new mobile feature is ingenious. The daily deal e-commerce site began testing yesterday Instant Deals, a new feature within in its mobile app that lets users search for deals within a half-mile radius of their current location.

Unlike LivingSocial’s usual daily deals, which are live for 24 hours, Instant Deals are live for a short period of time. The goal, LivingSocial says, is to help merchants attract traffic during slow times. For example, a dinner restaurant can increase its sales during a slow afternoon by offering a special deal between 3 p.m. and 5 p.m., LivingSocial says.

It’s smart because it fights one of the biggest complaints local establishments have about daily deal programs: the revenue they have to give up to participate. A retailer, spa or restaurant offering a $100 voucher for $50 has to share the $50 or so with LivingSocial, getting only $25 for $100 worth of merchandise, food or services. But if the deal is offered only during a time when the customer base is slim to none, as is the case with Instant Deals, well that’s a whole different story. After all, some business is better than no business.

It’s no secret that the daily-deal space is more crowded than my favorite local deli at lunch hour. But if this feature from LivingSocial can help that deli bring a dozen hungry patrons at 3 p.m. when the order counter is empty, I’d venture to say it would be eager to sign on.

It’s out-of-the box thinking like this that will separate winners from the losers in the daily-deal arena. Right now it’s a battle between Groupon and LivingSocial as No. 1 and No. 2. Point: LivingSocial.

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