Living Social expands into Digital Coupons

Living Social expands into Digital Coupons

In an interesting move, Living Social has expanded into digital coupons.

Given the fact that services like Retailmenot is valued around 1 billion on sales volume of about 200 million, given the fact that the likes of ebates (over $100 million in revenues), coupons.com between $1-200 millin, valpak, savings.com, and other large couponing services are doing rather well in the USA, it would seem that consumers are providing demand for savings more than ever before beyond the daily deal industry. The impact that couponing has on overall retail sales is far larger than the value of the present daily deal sector and Living Social would like to take advantage of that.

While Groupon focuses on becoming the Local Commerce Platform for small business as well as the main destination for local deals for consumers, Living Social, instead is focusing solely on the consumer shopping experience. The addition of couponing to Living Social’s services is a smart one as long as they start developing direct relationships with retailers. That’s where the margins are. If they are simply an affiliate and collect their 5-10% commissions from affiliate networks like CJ, Linkshare, etc then they will not generate enough. As for their audience; they already have millions and millions of users going to their site looking for deals. Now offering that audience other ways to save is a natural extension and makes sense for the consumer. The consumer is looking for local deals, they go to Living Social or Groupon or other areas in the states, but if they look for ecommerce deals or coupons, then Living Social is losing them to Retailmenot, Savings.com, ebates, offers.com, etc..(I fully anticipate that if this service grows well, that Living Social may very well start offering cash back to consumers as a loyalty play to keep coming back to Living Social…ie compete with eBates. )

So far this seems to be a strategy for the united states only. Living Social has not launched any digital coupons for Canada. We’ll let you know if that happens. Other Canadian sites such as Teambuy and Torstar’s Wagjag and Save.ca are also starting to act more like deal & coupon portals for the Canadian consumer as opposed to just one type of deal site. We should see this strategy continue.