US group buying site LivingSocial is set to launch its daily deals in the UK in the next few weeks. LivingSocial currently competes with Groupon in most major US cities.
I’ve been talking to Peter Briffett, UK MD of LivingSocial, about the upcoming launch….
How long has LivingSocial been going?
LivingSocial is about two years old, and was founded in Washington DC. The founders originally had an idea to create Facebook apps, and the first one they developed was Pick 5, which allowed users to rate and share books, magazines etc. After going almost unnoticed for a few weeks, it suddenly became the most popular Facebook app overnight.
This was followed by Digital Bookshelf, which allowed people to share and review the books they were reading. This now has more reviews then Amazon.
Around twelve months ago, we started launching daily deals from the Washington DC area. We offer great deals on restaurants, theatres, spas and more, provided that enough people buy into the deal. The customers get great deals, and businesses are guaranteed this custom.
The service is now live in 28 cities in the US now; we are expanding to the UK, and will be looking to cover more than 100 in the next year.
We believe this is the future of local advertising – for the first time you can guarantee local businesses a larger volume of people into their shops or restaurants without them having to make an upfront payment.
We have an excellent subscriber list, which is key to the success of the business. We have to keep them engaged with the very best offers, so we pitch the offer at a level that these customers appreciate.
Is the success of this business model due to the power of urgency?
Yes, the offers run for just one day, so customers have to make a quick decision if they are going to take advantage of any of our offers. We also offer other incentives to customers, so if they get three friends to take up a deal, they’ll get it free of charge.
Our job is to offer consumers an attractive and compelling proposition, while for merchants we are able to generate a large amount of traffic.
How do you make money?
We deal with all the payments for merchants and take a commission for each deal.
How much funding has LivingSocial taken so far?
We’ve taken around $44m in funding across a number of different rounds. With this market, it’s a bit of a land-grab at the moment, and there is a race to establish a presence in multiple territories.
We want to expand and grow as quickly as we can, and this kind of rapid expansion requires funding to scale up.
Why launch in the UK?
London is the place to start after the US, and there are already eight different companies offering this service in the city so far, which suggests there is some consumer demand already.
We already have a large subscriber list here, and we believe that our service will work just as well in the UK. The launch is just a few weeks ago, and we will expand to other cities in the UK later in the year.
Are you doing anything around mobile?
We have an iPhone app, which allows customers to access the daily deals on their mobiles, and to send gift vouchers to their phones so they can be redeemed without the need to print them out.
More and more people are opting to use mobile for this; a high percentage of our users are buying and redeeming deals on iPhones.
How big is the LivingSocial team?
We have people on the ground in every city building relationships with retailers and local businesses, and finding out the best places in each town to offer to customers.
We like to know what’s happening on the ground, so we have two people in every city we cover. We also have a development team in Washington, and are starting a serious recruitment drive, so we’re growing all the time.
You’ve seen pretty amazing growth over the past couple of years. What do you attribute that to?
Yes, we’ve had phenomenal growth and this is because group buying is a great concept that people love.
Everyone benefits from it too; retailers get the opportunity to advertise their businesses and drive significant custom into their stores or restaurants, and customers get some great deals.
First we have the launch in London, and we’ll be expanding to another eight to ten UK cities, and the next logical step after that is Europe. The concept is simple, it’s been proven to work, and should translate well to any city.