The local commerce industry as represented by daily deal sites like Groupon and LivingSocial is still barely learning to walk, even though Groupon has 10,000 employees and LivingSocial has 5,000. While the two companies look nearly identical today, don’t be surprised if they diverge.
LivingSocial CEO Tim O’Shaughnessy reminded me in a conversation last week that “a lot of people lumped eBay and Amazon together 10 years ago” because they both were “ecommerce” companies. And while there were plenty of similarities and direct competition, each one ended up taking a different path. He suggests the same thing will happen with local commerce between Groupon and LivingSocial. “Fundamentally, I am sure we don’t think about things exactly the same way,” he says, “so we will have different strategies.”
And just as it would have been foolish to define Amazon as nothing more than an online bookseller in the mid-1990s, thinking of LivingSocial or Groupon as only daily deal sites is too limiting. “Where do you go to search?” asks O’Shaughnessy. “The answer for most people is Google.” Where do you share things with your friends online? The answer is Facebook or Twitter. “Where do I go to interact with local merchants in my city?” he continues. There is no default answer yet.
“Daily deals can clearly be part of that equation, but they are not sufficient to answer that question. It is the start,” says O’Shaughnessy, “what allows us to build and scale a substantive member base and base of merchants. There are a host of opportunities where we can be that catalyst between our members and merchants.”
Which opportunities is he planning to go after? He wants LivingSocial to “be viewed much more as the local commerce platform.” Imagine more dashboards and tools for local merchants which help them figure out things like the lifetime value of a customer or their retention rate. ” You need automated closed-loop capabilities to do that,” he says. (Closing the redemption loop is the big challenge right now in local commerce—how do you track offers all the way through to payment?)
The offline component of the business is just as important as the online. “We are an online to offline business,” he points out. “People focus on the online portion, not the offline portion. Over the course of the year that will be an area of emphasis, real touch points. Something physical and real can be more emotive than a click.”
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