What is LivingSocial?
LivingSocial is an online marketplace that allows its registered users to buy and share things to do in their city. LivingSocial, the Washington start-up that rode the daily deals craze to markets across the globe, has died as a stand-alone company. It was nearly 10 years old. Groupon, its chief rival, revealed last week that it acquired LivingSocial’s remains for $0.LivingSocial is a leading website offering daily deals to buy and share the best things to do in your city – or wherever you may be.
What happened to LivingSocial?
In October 2016, Groupon, the company’s longtime rival, absorbed LivingSocial. It paid nothing for a company that had raised nearly $1 billion from investors, according to Crunchbase, and was valued at nearly $6 billion at its height. Why the downfall? Critics have long called Groupon’s model unsustainable. Customers get subpar services from swamped businesses, while businesses get a bad deal in the long term. One analysis found only ~20% of Groupon buyers returned for full-price purchases.Groupon’s business model relied heavily on offering deep discounts to attract customers, which did not result in long-term customer loyalty for the merchants. Many businesses complained that the deals were not profitable and did not lead to repeat customers.Summary. Shares of Groupon have continued to slide, as revenue trends worsen despite higher marketing spend. Groupon’s business model suffers from dis-economies of scale, requiring costly sales efforts to chase local deals, leading to a vicious cycle of revenue decline and expense cuts.Daily-deal platforms like Groupon and Woot still attract millions of bargain-hunting shoppers. In fact, Groupon alone saw around 18 million active customers in 2023—proof that the appetite for short-term discounts hasn’t gone anywhere.The customers they won with damagingly low deals on Groupon did not become loyal customers but moved on to exploit the next amazing deal, leaving small businesses with only the costs. As a result, they pulled back from their deals, and Groupon had to expensively acquire new businesses to keep the deals site full.