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Why LivingSocial's Business Model is so successful?

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LivingSocial’s Company Overview


LivingSocial is a dynamic online marketplace dedicated to connecting consumers with local experiences, goods, and services. Specializing in curated deals, LivingSocial facilitates a diverse range of categories including dining, entertainment, fitness, beauty, and travel, ensuring that users have access to a plethora of activities and products at competitive prices. By offering a platform where consumers can discover and purchase unique experiences and items, LivingSocial enhances the social aspect of commerce, seamlessly integrating it with everyday lifestyles. With its roots dating back to its earlier incarnation as Hungry Machine Inc., the company has continually evolved, now serving a broad spectrum of businesses from local merchants to national brands and affiliates.

LivingSocial's business model is centered around creating a symbiotic relationship between consumers and merchants by providing a digital marketplace tailored to localized needs. The platform leverages the power of targeted marketing and data analytics to present users with personalized recommendations, enhancing the relevance and appeal of offered deals. This approach not only boosts user engagement but also drives substantial foot traffic and online sales for partnering merchants. LivingSocial stands out through its commitment to quality, ensuring that all listed deals are carefully vetted for value and authenticity. By fostering a vibrant community of local businesses and enthusiastic consumers, the platform enriches the local economy while meeting diverse consumer demands.

The revenue model of LivingSocial is multifaceted, primarily hinging on commissions from deal transactions. When a consumer purchases a deal via the platform, LivingSocial earns a percentage of the sale price as a commission from the merchant. Additionally, the company offers premium placement services for merchants who wish to amplify the visibility of their deals, thus garnering higher audience attention and potential sales. LivingSocial may also monetize through strategic partnerships and advertising, enhancing its revenue streams while maintaining a user-centric approach. This diversified revenue model ensures a stable and sustainable financial framework, supporting the company's operations and continuous growth.

http://www.livingsocial.com

Headquater: Washington, District of Columbia, US

Foundations date: 2007

Company Type: Private

Sector: Consumer Goods

Category: eCommerce

Digital Maturity: Digirati


LivingSocial’s Related Competitors



LivingSocial’s Business Model Canvas


LivingSocial’s Key Partners
  • Local Businesses
  • Merchants
  • Event Organizers
  • Activity Providers
  • Travel Agencies
  • Restaurants
  • Service Providers
  • Affiliate Marketers
  • Payment Processors
  • Technology Vendors
LivingSocial’s Key Activities
  • Negotiating Deals with Vendors
  • Marketing and Promotions
  • Customer Support
  • Website Maintenance and Updates
  • Data Analysis and Targeting
  • Mobile App Development
  • Partnership Management
  • Event Planning
  • Quality Assurance
  • Community Building
LivingSocial’s Key Resources
  • Local partnerships
  • Technology infrastructure
  • Sales team
  • Marketing personnel
  • Customer support team
  • Data analytics systems
  • Strong brand presence
  • Vendor relationships
  • Content creation team
  • Mobile app and website development experts
  • Legal team
  • Financial resources
LivingSocial’s Value Propositions
  • Daily deals
  • Discounted experiences
  • Exclusive offers
  • Local business promotions
  • Adventure activities
  • Gourmet dining discounts
  • Spa and wellness offers
  • Family-friendly deals
  • City tours and events
  • Fitness and health programs
  • Travel packages
  • Limited time offers
  • Customer savings
  • Unique activities and experiences
  • Personalized recommendations
LivingSocial’s Customer Relationships
  • Customer support via email and chat
  • Personalized offers and deals
  • Loyalty programs
  • User reviews and ratings
  • Social media engagement
  • Regular newsletters and updates
  • Mobile app notifications
  • Exclusive member benefits
  • Referral programs
  • Partnership promotions
LivingSocial’s Customer Segments
  • Deal seekers
  • Adventure enthusiasts
  • Young professionals
  • Families
  • Local businesses
  • Urban dwellers
  • Foodies
  • Health and wellness seekers
  • Pet owners
  • Travel lovers
LivingSocial’s Channels
  • Website
  • Email Marketing
  • Mobile App
  • Social Media Platforms
  • Search Engine Marketing
  • Partner Websites
  • Direct Sales Team
  • Affiliate Marketing
  • Customer Support
  • Public Relations
  • Online Advertising
  • Community Events
  • Referral Programs
  • Blog
  • Content Marketing
LivingSocial’s Cost Structure
  • Website maintenance and hosting costs
  • Employee salaries and benefits
  • Marketing and advertising expenses
  • Merchant and partner payments
  • Transaction processing fees
  • Office and operational expenses
  • Legal and compliance costs
  • Technology and development costs
  • Customer support and service costs
  • Data analytics and business intelligence tools
LivingSocial’s Revenue Streams
  • Daily Deals
  • Travel Packages
  • Event Tickets
  • Product Promotion Fees

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LivingSocial’s Revenue Model


LivingSocial makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Group buying
  • Brokerage
  • Two-sided market
  • Advertising
  • Online marketplace
  • Transaction facilitator
  • Discount club
  • eCommerce
  • Affiliation
  • Referral
  • Experience
  • Self-service
  • Acquiring non customers
  • Customer loyalty
Analytics


Market Overview
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  • Sectors
  • Categories
  • Companies
  • Right click on the nodes to explore

LivingSocial’s Case Study


LivingSocial's Case Study

LivingSocial has long been a fascinating case study within the eCommerce ecosystem. Since its inception in 2007, the dynamic online marketplace has revolutionized how consumers interact with local businesses, securing its place as a pioneer in social commerce. Let's delve into the journey of LivingSocial, and uncover what makes its business model uniquely successful.

The Beginnings: Hungry Machine Inc. to LivingSocial

The story of LivingSocial started with a humble beginning under the name Hungry Machine Inc. Founders Eddie Frederick, Tim O'Shaughnessy, Aaron Batalion, and Val Aleksenko were driven by a vision to create a platform where users could find cohesive community experiences seamlessly integrated into their daily living. This mission led to the rebranding of the company as LivingSocial. From there, it didn’t take long for the company to become a household name in the realm of daily deals. LivingSocial’s objective extends beyond mere transactions; it aims to enhance the social dimension of commerce. This commitment has played a critical role in their success and sustained relevance.

The Core of LivingSocial’s Business Model

LivingSocial operates as a two-sided marketplace, bridging the gap between consumers looking for discounts and experiences and merchants eager to drive traffic and sales. This symbiotic relationship forms the crux of LivingSocial's business model, as it meets the specific localized needs of both parties.

Personalized Marketing and Data Analytics

What truly sets LivingSocial apart is its proficient use of data analytics. By leveraging sophisticated algorithms and behavior metrics, LivingSocial curates personalized deals that resonate deeply with user preferences. For instance, a foodie in San Francisco could receive gourmet dining discounts, while a yoga enthusiast in New York might get wellness offers. This precise targeting not only bolsters user engagement but also ensures high conversion rates for merchants.

Vetting and Quality Assurance

LivingSocial is distinctly committed to ensuring that all its deals are carefully vetted for value and authenticity. This discernment builds consumer trust and loyalty, setting it apart from other discount platforms that sometimes compromise on quality. The platform guarantees that users are always receiving offers that are both beneficial and true to their claims.

Revenue Streams and Diversified Financial Model

LivingSocial’s revenue model is compelling in its simplicity yet rich in its diversity. Primarily, the company earns most of its revenue through commissions on deals sold. When a consumer purchases a deal via LivingSocial, the company takes a percentage of that transaction. According to Market Realist, in its peak years, LivingSocial garnered substantial profits from commissions ranging between 30 and 50 percent per deal (Market Realist, 2016). Additionally, LivingSocial capitalizes on premium placements, where merchants can pay extra to enhance the visibility of their deals. This revenue stream is mutually beneficial - merchants gain boosted exposure while LivingSocial enjoys an additional income source. Other revenue channels include strategic partnerships and advertising, creating a multifaceted revenue model.

Strategic Partnerships and Community Building

LivingSocial’s forward-thinking approach involves forming strategic partnerships with a plethora of local businesses - from small weekend markets to national chains. According to an article by Forbes, these partnerships have been instrumental in facilitating a diverse range of deals and offerings that keep consumers coming back (Forbes, 2021). Moreover, LivingSocial invests heavily in community building. By fostering vibrant local communities, the platform achieves deeper user engagement and loyalty. Customers can leave reviews, rate their experiences, and share deals through social media – effectively creating an organic marketing loop.

The Special Ingredient: LivingSocial’s Unique Consumer and Social Impact

What distinctly makes LivingSocial special is its focus on the broader social impact. The platform satisfies various consumer needs on multiple levels: - Life-Changing: Users gain a sense of affiliation and belonging by indulging in local experiences that foster communal ties. - Emotional: Deals that reward users by enhancing their lifestyles - be it a beauty spa package or a riveting local tour. - Functional: By offering significant discounts, LivingSocial helps consumers reduce costs, simplify plans, and save money. LivingSocial captures the essence of creating shared experiences, driving the feeling of connectedness within the community. This constant pursuit of enriching user lives through curated experiences is at the heart of its continuous evolution and resilience in the market.

Challenges and Lessons from LivingSocial’s Journey

The trajectory of LivingSocial hasn’t been without its challenges. The market dynamics, competitive pressures, and the intrinsic fluctuations of consumer behaviors have tested the company’s agility. However, the insights gleaned from LivingSocial’s journey offer vital lessons: 1. Adaptability is Key: Despite facing market challenges, LivingSocial consistently redefined its strategies to stay relevant. 2. Data-Driven Decisions: Emphasizing data analytics allowed accurate targeting and personalization, which have been crucial for user retention and conversion. 3. Quality Over Quantity: Prioritizing quality assurances in all deals maintained user trust and loyalty over the years.

Conclusion

The LivingSocial case study exemplifies how a digital marketplace can transform local commerce through strategic innovation and a profound understanding of consumer needs. By fostering unique experiences and driving community engagement, LivingSocial stands as a testament to the power of effectively bridging the gap between local merchants and eager consumers. The journey of LivingSocial is rife with learning opportunities. It is not merely a tale of eCommerce success but a narrative of emotionally connected, impactful commerce that resonates deeply with today's consumer-centric digital age. It serves as a model for upcoming digital platforms aiming to find that sweet spot between value creation for consumers and sustainable growth for businesses.


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