Foursquare this morning announced distribution partnerships with daily deal providers LivingSocial, Gilt City, zozi, BuyWithMe and AT&T. Missing from the list are Groupon, Yelp and Google Offers.
With these deals, Foursquare is attempting to solve two problems: liquidity in deals and its own lack of a revenue model.
Foursquare already has a reasonable number of deals on its own. How many, exactly, it refuses to say. But I even found one during a stopover in Ketchikan, Alaska. I couldn’t get a 3G signal, but I could get a Foursquare deal.
Foursquare will now distribute the deals to its users on behalf of its partners. At this stage of the mobile deals market, it helps all of the players out there to work together. None of these companies have all of the pieces of the puzzle: Foursquare has distribution, but no local salesforce. LivingSocial and the others have salesforces and some deals but no meaningful mobile distribution.
Without cooperation, you run into the Color problem—you check to see what’s there, see nothing, check again, see nothing and then stop checking. A single purpose deals app will get old quickly. Deals need to be shown where people already are for other reasons.
Foursquare is one of those outlets. The company won’t disclose how many monthly unique users it has, but I would estimate it at 2-3 million, based on typical Internet decay rates of registered users and its recent milestone of 10 million registered users.
However, I see three key challenges with Foursquare deals:
There is also competition between Foursquare and its partners. Tomorrow, LivingSocial is offering $1 lunches at more than 100 places in San Francisco to promote the launch of LivingSocial Instant. I asked LivingSocial if those deals will be available through the Foursquare app.
“Tomorrow’s dollar lunch will only be available thru the LivingSocial apps or the LivingSocial website,” replied spokeswoman Maire Griffin.
In other words, LivingSocial would like you to install their app.
Foursquare is a geographical location based social network that incorporates gaming elements. Users share their location with friends by “checking in” via a smartphone app or by text message. Points are awarded for checking in at various venues. Users can connect their Foursquare accounts to their Twitter and Facebook accounts, which can update when a check in is registered. By checking in a certain number of times, or in different locations, users can collect virtual badges. In addition, users...
LivingSocial is the social commerce leader behind LivingSocial Deals, a group buying program that invites people and their friends to save up to 90 percent each day at their favorite restaurants, spas, sporting events, hotels and other local attractions in major cities. LivingSocial has an extensive user base of more than 85 million, and is headquartered in Washington, D.C.
Gilt City provides access to a broad range of local services at exclusive prices to its membership. Each sale lasts seven days and features many of a city’s most sought-after restaurants, spas, concerts, cultural offerings and more. Gilt City is currently available in New York, Boston, Chicago, Miami, San Francisco and Los Angeles. A subsidiary of Gilt Groupe Inc., Gilt City is headquartered in New York City with local curators in each market.
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