March 31, 2011, 12:00 AM

Facebook and LivingSocial have more deals in the works to take on Groupon

Refusing to let Groupon be the only hot-growth player in local deal-of-the-day sites, Facebook and LivingSocial have their own ambitious deal-making plans in the works.

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Groupon may be a hot property for deal-seekers, but Facebook Inc. and LivingSocial have their own plans in the works to expand in the growing deal-of-the-day market.

Facebook plans to expand the reach of its Deals program to offer exclusive online daily deals, the world's largest social network says. The program will enable shoppers to buy daily-deal vouchers on Facebook and share offers with their friends on the social network. "Local businesses will be able to sign up to use this feature soon," a spokeswoman says.

Facebook initially will offer the service in five cities: Atlanta, San Francisco, San Diego, Dallas and Austin, Texas.

In addition to leveraging its own sales team to sign up businesses to offer deals, the social network will also aggregate deals from nine other sites—Gilt Groupe's Gilt City, Home Run, OpenTable, Pop Sugar City, KGB Deals, Plum District, Tippr, Reach Local and Zozi.

By offering its own deals, as well as aggregating other sites' offers, Facebook is looking to grab a share of the rapidly growing online daily-deal industry, which could generate up to $6.1 billion in sales in the U.S. alone by 2015, according to a recent report by BIA/Kelsey, a media research and consulting firm.

LivingSocial, meanwhile, is combining two industry buzz words in its latest offering: location-based and daily deals. The No. 2 daily deals e-commerce site is testing in its home town of Washington, D.C., 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 lunch restaurant can increase its sales during a slow afternoon by offering a special deal between 3 p.m. and 5 p.m., LivingSocial says.

"As the local commerce industry continues to evolve, we continue to innovate our products and deepen our merchant and customer relationships," says Tim O'Shaughnessy, CEO of LivingSocial. "We're headed into unchartered territory, focusing on meeting merchants' varying business goals with members' demand for instant access."

LivingSocial operates in U.S. and international markets and has more than 20 million subscribers. It says it has saved its users $311 million since its launch in 2009.

BIA/Kelsey, a media research and consulting firm, projects that U.S. consumer spending on Groupon, LivingSocial and other daily-deal sites will reach $1.25 billion this year, a 43% jump from $873 million in 2010.

zak@verticalwebmedia.com

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