Living Social Post (2/1/11)

It is absolutely unbelievable how the internet and e-businesses have opened every aspect of our lives to restaurants and several other activities in our area that we never knew existed.  E-businesses such as LivingSocial and Groupon open my eyes to something knew located in DC or Northern Virginia almost everyday.  Living Social is now classified as the "fastest growing company in the social buying category".  I am sure most of you know how LivingSocial works, but just in case, everyday they send out a daily deal.  Each deal is highly discounted (usually a 50%  or more discount), once the deal is purchased you will receive a voucher within one day, and the best part is if you decide to share the deal with friends and three of your friends decide to purchase it you will receive your deal for free!  The convenience of this system is icredible, but is made even more convenient with the iphone application.  As a consumer I love LivingSocial because it opens my eyes to many salons, restaurants, cleaning services, sporting businesses and activities, and much more that I never knew existed and for a great prices.  Just when I think to myself, I need to do or try something knew, LivingSocial surprises me with another one of their great deals.  Another positive of this e-business is that retailers benefit in more ways than one.  Retailers do not need to pay in order create a deal through LivingSocial.  They simply need to contact the company who works with them to develop a deal then half of the proceeds from every purchase goes to LivingSocial while the other half goes to the retailer.  Not only does the retailer gain profits from "free marketing" but they also gain consumer awareness. 

One of the most important things LivingSocial has to take into consideration is a retailer's ability to meet the large increase in demand.  Several cases occurred where retailers struggled to handle the demand which resulted from one of the daily deals thus leaving unsatisfied customers.  Not only does this reflect badly on the retailer, but it leaves customers with a salty feeling towards LivingSocial.  It almost reminds me of situations where the messenger of bad news is punished solely because they were the bearer of the news.  An example of this may occur this week with the severe winter storm lurking.  People tend to dislike or get mad at the weather man since he is the one informing them of the bad weather ahead.  LivingSocial is not the one who could not handle the demand, but customers may blame them since they are the ones who introduced the customer to the retailer.  Now LivingSocial makes it a point to ask detailed questions regarding a retailer's ability to meet certain demands.  If the company does not feel as if the retailer can handle the demand resulting from a daily deal they will not complete the deal.  I understand LivingSocial's concern and need to look after their reputation, but it does leave some small businesses looking to expand in a catch 22 situation.