Business Model - LivingSocial offers new deals each day to its members who subscribe via email. Once a deal has been purchased, members are e-mailed their redemption vouchers the following business day. In addition, there is a referral scheme which makes the offer for a member free if three referrals from the member purchase the offer. Members must either print out their vouchers or download the LivingSocial app on their Android, iPhone, iPad, or iPod to redeem. LivingSocial also provides new customer leads at no upfront cost to merchants, however LivingSocial takes a cut of the deal revenue. Merchants can also control what the offer involves and may choose to cap purchases, as not to overwhelm their business.
Recommendation - It appears that couponing models from sites such as LivingSocial have passed their peak - the performance of LivingSocial is likely to, in the near future, be an important indicator of the segment. I would want LivingSocial to use the technique of Innovation in IT. It will fit in the second strategy when the company is operationalized. New innovations used by LivingSocial can lead to revenue growth. LivingSocial should make innovations in their business to be more profitable when consumers pay LivingSocial when the deal is purchased. Hence, making these changes can generate good revenue for them when they take a typical 30%-50% share of the revenue generated by the deal after paying the local businesses. Innovations could increase product/service revenues more than how much they had received in 2011 i.e $176 million. New innovations can also lead to cost reduction. And hence, Innovation can be a source of competitive advantage to LivingSocial. The focus is to analyze the steps taken by the two main online competitors and one future competitor of LivingSocial, they are : Groupon, Bloomspot and Google Offers and act accordingly. Hence, in order to have a competitive advantage, LivingSocial should have to follow the steps used in the model of competitive strategy from Porter, Michael E. they are : Objectives of LivingSocial -> Strategy to compete -> Resources and capabilities -> Assumptions -> Centralized by Competitors. To be more competitive and innovative in the market, I would like to change the model of LivingSocial by not viewing themselves as a daily deals business, but as a local commerce business. I envision a future where LivingSocial becomes an online seller of goods and services beyond just its daily deals. In this way, LivingSocial can be a competitor of Amazon (a LivingSocial investor). LivingSocial can also implement the technique of CRM as a tool to built relationship with crucial customers through technology. Through CRM, it can provide good service and manage customers that are important to maximize profit per customer.2. -Use of Social