Group buying services have caught on like wildfire in this last year, with deep discounts such as Groupon’s offer for 50 percent off at the Gap attracting consumers looking to save. And these deals sites don’t just sell coupons for clothes; discounts are offered on everything from a pair of jeans to skydiving lessons. Another major player, LivingSocial, features vacation packages and city-specific outings. Best of all? New deals on goods and services are added to these sites each day.
The reason Groupon and LivingSocial can offer these spectacular deals is because they work with local and national companies, offering access to millions of customers in exchange for a cut of sales. Merchants can use the deal as promotion, offering a deal at or below cost as a way to get new customers in the door. There’s a heavy emphasis on local deals, such as half off at neighborhood restaurants, but both companies also offer deals at national chains or online merchants from time to time.
Groupon promises merchants a minimum number of customers, so a promotion only takes effect after a certain number of people sign up for each day’s deal. This actually helps turn customers into marketers, since anyone who really wants a deal to take effect will likely help promote the bargain to their friends via Facebook, Twitter, e-mail, or word of mouth. LivingSocial deals don’t have this sort of tipping point requirement, but instead offers customers incentives for getting friends to sign up.
Both Groupon and LivingSocial offer deals through their websites, e-mail alerts, and mobile apps. There’s nothing stopping you from signing up for both services, since you only pay for the deals you want. However, if you’d rather not keep up to date with two daily deal sites, we’ll help you decide which service is best for you.
THE COMPETITORS
Groupon is the company that started the current daily deals craze. The service launched in late 2008 and now offers deals in more than 500 markets in 44 countries. Groupon has more than 70 million subscribers, making it the biggest company of its kind.
While coupon sites have offered discount codes for ages, Groupon actively works with local businesses on deals specifically targeted at the company’s subscribers, offering just a small number of deals in each city each day. When a bakery, auto detail, or gym offer comes your way through Groupon, it’s because the company’s agents have worked with a local business to design that specific deal. The deal is typically available for a limited time and offers goods or services at a heavy discount. In order for Groupon customers to get the daily deal, a minimum number of people must sign up for it. This is where the social sharing aspect comes in; users can share a daily deal via Facebook, Twitter, and more to increase the chances that the deal is on.
In the other corner, LivingSocial offered its first deal in July, 2009, and today offers daily deals in 205 markets in 11 countries. The company has about 24 million members. Like Groupon, LivingSocial offers a combination of bargains from local and national businesses with a heavy emphasis on finding deals near the places you live, work, or visit.
Groupon refers to companies such as LivingSocial as “clones” rather than “competitors,” but LivingSocial attempts to set itself apart by offering “Escapes” as well as deals from local merchants every day. These can range from a weekend at a bed & breakfast in Vermont to a four-night stay at a Colombian resort. (Groupon also offers discounts on travel, but typically to locations near a user’s city.)
LivingSocial also arranges organized trips, which it calls “Adventures,” with a LivingSocial employee hosting a guided experience such as a day trip from Manhattan to the ski slopes for snow-tubing and dinner.
DEAL VARIETY
Groupon and LivingSocial bill themselves as local deals sites, offering bargains on goods and services in a number of regions around. Occasionally you’ll also find bargains from online retailers or national chains. For example, Groupon recently offered $50 gift cards to the Gap for $25, while LivingSocial made headlines by selling 1.3 million $20 Amazon gift cards for $10 each in January.
Recent Groupon deals have included eight pilates sessions for 50 percent off, $5 for $10 worth of cupcakes, and 59 percent off a 30-minute photo shoot with a professional family portrait photographer. During the same period, LivingSocial offered 66 percent off a teeth whitening session, $20 to spend on food at a restaurant chain for $10, and 51 percent off an hour-long massage.
There’s not really much difference in the types of daily deals offered by each service. LivingSocial really differentiates itself by offering two types of deals you won’t find from Groupon: Adventures and Escapes.
The Adventures are guided experiences offered by a LivingSocial employee. They’re often quirky, with recent examples including a Shootin’ & Drinkin’ excursion involving time at a shooting range followed by dinner and drinks, a paintball trip (followed by food and beer), and an improve comedy workshop. Adventures are currently only offered in a handful of cities, but LivingSocial is expanding the list.
LivingSocial Escapes offers discounted deals on travel destinations. These are offered much more frequently than adventures, with new escapes arriving every week. Offers range from half off the price of a two-night bed and breakfast stay in Virginia to four nights at a resort in Bogota, Columbia for 40 percent off. While the escapes are typically offered at the same kind of deep discounts as local bargains, it’s important to note that these deals typically include hotel or resort fees, but not airfare or other travel expenses.
LivingSocial also has a Family Edition, which offers family-friendly deals, such as discounted photo shoots with a portrait photographer and half-off tickets to Cirque du Soleil.
WINNER: LIVINGSOCIAL
Groupon offers deals in more locations throughout the globe, but LivingSocial wins this round by offering the same types of deals, plus specialized deals in the Adventures and Escapes categories.
SOCIAL SHARING
Group buying services only work if they can deliver enough customers to a merchant to make the experience worthwhile. If not enough customers sign up for a Groupon deal, the bargain is canceled and your payment won’t be processed. Of course, that’s not what the merchants, customers, or bargain site wants, so Groupon offers incentives for sharing deals with your friends and colleagues.
Groupon provides links to share bargains via Facebook, Twitter, or e-mail on every deal page. Using them doesn’t just help make sure the deal is on for each day; users can also get a bonus by referring friends. Groupon gives you $10 to spend on any deal when you get a friend to sign up for the service and make a first purchase.
LivingSocial doesn’t require a minimum number of customers to sign up. Instead, the company has another way to convince users to share deals: When you get three people to purchase a daily deal, the company won’t charge you for that day’s deal.
WINNER: LIVINGSOCIAL
While it may be harder to get three people to purchase the same deal you’re pursuing, getting a deal for free can be much more valuable than the $10 Groupon offers for signing up new customers. With LivingSocial, there’s also no reason to worry that a deal will be canceled after you’ve signed up.
APPS
Users can visit the LivingSocial and Groupon websites to see the latest deals each day, sign up to receive e-mail notifications, or use mobile apps. LivingSocial has apps for Android and iOS in addition to a mobile website, but Groupon goes further by offering mobile apps for BlackBerry and webOS, as well as Android and iOS. Groupon also has two different mobile websites: touch.groupon.com for smart phones with touchscreen displays and a simpler mobile page for other web-enabled phones at m.groupon.com.
Groupon’s mobile apps show a featured deal each day as well as other nearby bargains. You can see highlights, fine print, and company details, as well as the price, discount level, and how much time is left before the deal expires. Of course, there’s also a big “Buy!” button for making purchases. You can also view your Groupon history and a list of other deals available near you.
While the Groupon apps for iPhone and Android offer the same information, the iPhone version features a more attractive layout with highlights, fine print, and company information separated into tabs at the bottom of the home screen.
The Android app tucks the tabs way at the bottom of the page so you have to scroll all the way down before you get to the links to share a deal with your friends. On the bright side, the iPhone app only lets you share via e-mail, Facebook, or Twitter, while Android users can share using any app that ties into the phone’s sharing feature, including e-mail, Facebook, SMS, Twitter, WordPress, and other blogging or social applications.
The LivingSocial mobile apps show daily deals, escapes, and purchases made with your account. You can also adjust your account settings.
Oddly, LivingSocial’S Android app looks a lot like Groupon’s iPhone app, while the LivingSocial iPhone app has a dramatically different user interface. The Android application features details, fine print, and location tabs at the bottom of the home screen, with details about the bargain front and center, along with a “buy now” button. It’s also easy to view a list of nearby deals or switch to a list of LivingSocial Escapes from the home screen.
When you launch the LivingSocial iPhone app, you’re greeted with four big buttons for daily deals, escapes, purchases, and settings. As home screens go, it’s not all that inviting. It takes two clicks to get to the day’s deals, but once you do, the page features the price and a “buy” now button, followed by statistics about the day’s deal and fine print. Just like the Groupon Android app, you have to scroll to the bottom of the page to find sharing links. If we didn’t know better, we’d have guessed that the same company made the Groupon Android and LivingSocial iPhone apps and vice versa except that the LivingSocial Android app is curiously missing any links for sharing content.
Both companies’ mobile apps allow users to log in with a username and password or by using their Facebook credentials.
WINNER: GROUPON
Not only does Groupon offer apps for more mobile platforms than LivingSocial, but the company’s iPhone and Android apps are more attractive and easier to navigate. It would be nice, though, if Groupon’s Android app looked a little more like the iPhone app.
CUSTOMER PROTECTION
Since both companies curate offers before making them available, you can usually be sure that restaurants aren’t doubling their normal prices before offering a 50 percent off coupon. Deals are also carefully picked; a Groupon representative says the company turns away seven potential deals for every bargain that’s picked, while LivingSocial prides itself on having agents in every market where deals are offered, allowing the company to maintain face-to-face relationships with local businesses.
Both companies have fine-print sections that include expiration dates and other restrictions on deals in plain language. That doesn’t mean problems don’t occur, but Groupon has a refund policy for disappointed customers. In a recent case where a vendor was accused of hiking prices before offering a sale through Groupon, the company offered full refunds to disappointed customers.
LivingSocial also offers a refund policy in cases where the merchant refuses to honor a voucher.
WINNER: DRAW
Both Groupon and LivingSocial have a track record of offering full or partial refunds when problems have occurred.
VERDICT
Groupon is a larger company with more subscribers, which could theoretically allow the service to offer deeper discounts, but in our experience the types of deals and the amount of savings offered by Groupon and LivingSocial were quite similar—at least until you start adding LivingSocial’s travel deals and guided experiences into the mix.
The key advantage to Groupon’s size is that the company is available in more than twice as many regions as LivingSocial, and in about four times as many countries. If you’re looking for deals around the globe, Groupon is more likely to have you covered, although LivingSocial is no slouch in its international reach.
On the other hand, if you’re looking for travel plans, quirky adventures, or family-friendly bargains, LivingSocial manages to set itself apart from Groupon by offering specialized deals as well as a good range of bargains on local dining, classes, and other goods and services. LivingSocial customers also don’t have to worry about deals being canceled if the number of people who sign up is too small.
If we had to pick one service to use today, we’d probably go with LivingSocial because it offers more types of deals and more valuable incentives for sharing deals. On the other hand, Groupon has better mobile apps for bargain hunting on the go and covers more cities and regions around the world. Fortunately, there’s no reason to choose. You can use both services and find two or more great deals each day.
