With LivingSocial their investment didn’t come from just anyone. No, in fact with Amazon leading the way this money is very real and it bodes well for the company currently viewed as the ‘other guy’ in the space (not to mention the myriad smaller players and branded versions of Grouponesque offerings as well.).
Bloomberg reports on what kind of impact on LivingSocial’s way of doing business this cash will have.
LivingSocial will more than triple its employees next year to 1,800 and more than double the number of cities where it offers deals, CEO Tim O’Shaughnessy said in his first interview since the Amazon.com investment was announced last week. That would bring the service to 300 markets, about the number that Groupon now serves with its staff of 3,000.
LivingSocial has at least one sales representative in each of its 120 geographic markets. It will use the recent investment, which includes $175 million from Amazon and $8 million from venture-capital firm Lightspeed Venture Partners, to expand overseas and begin rolling out programs to help merchants retain shoppers. Most small and medium-sized merchants don’t have any form of customer relationship management, an opportunity for LivingSocial, O’Shaughnessy said.
In other words, LivingSocial now has the financial chops to come in behind Groupon and benefit from the current market leader’s mistakes. This could be the best time to really grab a piece of this market that, in the end, could make Groupon’s decision to go it alone look like the once in a lifetime opportunity it likely was.
Imagine if someone had made a serious run along side of Google back in the late 90’s as the search game was shaping up. What might things look like today if there had been two real competitors in the search space (at a minimum)? With the barriers to entry being much lower in the case of online deals (after all you don’t have to index the entire web and have thousands of servers to run your operation) and the ability for this market to quickly fragment with smaller players taking enough pieces of the pie to make a living without needing to be the biggest player in the space, this game is now wide open.
How do you see this playing out? At this point the two main players have been established with Groupon and LivingSocial having the lead in this market segment. In addition, it doesn’t take much digging to find other smaller players with either slightly different takes on the model (like one I am familiar with that allows site owners to easily offer deals on their own site but that doesn’t require any programming as well as being very affordable to every SMB) or smaller aspirations than the big boys.
Everyone loves a deal so this idea is not going away. Will there be a clear-cut leader in the space? That remains to be seen. Will it be Groupon or LivingSocial? That’s not a lock either. In the end, there seems to be a very real possibility that Groupon CEO, Andrew Mason, and his employees could be looking back at what could have been while struggling to fight off the pack of wolves at the gate. Then again, the Groupon group may look back and laugh at how they did their own version of Facebook (turning down big money early on) and made people like me look silly.
That’s for the future to decide isn’t it? What do you think this space will eventually look like and will Groupon, LivingSocial or someone else rule the roost?