Now, number two US player LivingSocial (85m users, $44m funding) has just launched its international expansion, opening up shop in London, UK – with a group-buy deal at celebrity chef restaurants – Marco Pierre White.
Interview with Tim O’Shaughnessy, co-founder of LivingSocial
LivingSocial differs from Groupon with a nifty referral program built in to the deal format, refer a deal to a friend and the deal is free for you.
Groupon President Rob Solomon explains that Groupon’s standard practice when it expands to a new market is to show users examples of the kind of deals they could get once the site goes live in their city. All of the fake deals on ClubeUrbano, he says, are meant to serve this purpose, but he concedes that Groupon has “done a terrible job of calling that out on the website”. Soloman says this will be fixed immediately.
Econsultancy and Techcrunch also note Groupon’s recent Chilean purchase of a Groupon clone, ClanDescuento, has a reputation for aggressive spamming tactics, and is know by some as ‘SpamDescuento’. Valued at $1.35 bn – this is not the sort of reputational risk that Groupon needs.
More generally, the Groupon debacle, if it continues, could pose a reputational risk to social commerce itself. Groupon is a high profile big player in the fast growing industry, surpassed in stature by only private flash-sale clubs such as Vente-Privée – that Amazon is rumored to be after for $3bn.
If Groupon’s reputation comes unstuck, social commerce comes unstuck. If the social commerce industry players fail to respect their customer and the conversational medium that they’re seeking to populate, social commerce may suffer the same fate as email marketing, now a synonym for junk mail for everyone but marketers.