Amazon Invests $175 Million In Living Social

SAN FRANCISCO — Amazon.com Inc. said Thursday that it invested $175 million in social coupon service LivingSocial – the latest sign that the online retailer is delving into promising new methods of e-commerce.

Similar to popular online coupon site Groupon, LivingSocial lets users sign up for daily discounts that are generally for 50 to 70 percent off at local businesses like pizzerias and hair salons. If you refer three friends who end up buying the same deal, you get the deal for free.

The investment comes as published reports say Google Inc. may be close to buying Groupon, which launched in late 2008 and kickstarted the market for group discounts online, in a deal worth as much as $6 billion. Such a deal would be Google's largest-ever acquisition. Neither company has commented on the reports.

Chicago-based Groupon wasn't the first to launch a group buying site, but its decision to sell coupons for products and services and launch at a time when people were more comfortable with e-commerce and social networking sites led to quick success. That encouraged a host of copycats, such as LivingSocial, CrowdSavings and Tippr.

LivingSocial, which also snagged $8 million more in funding from Lightspeed Venture Partners, said it will use the investments to grow its business. The company offers deals in 120 locations; over 10 million subscribers receive its daily e-mails.

The deal with LivingSocial is Amazon's latest move to get involved in non-traditional online retail businesses. The Seattle-based company said in October that it would buy members-only online shopping site BuyVIP.com, which operates in several European countries, and in June Amazon snapped up quirky deal-a-day website Woot.com.

LivingSocial, which is based in Washington, D.C., was founded in 2007 and initially offered the social discovery Facebook app "Visual Bookshelf" and later another one called "PickYourFive." The company began rolling out daily deals in July 2009.

So far, that more recent business venture seems to be working. Spokeswoman Korina Buhler said LivingSocial is booking, on average, more than $1 million in revenue each day from its daily deals, and expects to earn more than $100 million this year. The company is on track to book more than $500 million in revenue from deals in 2011, she said.

Amazon shares rose 47 cents to $177 in after-hours trading. The stock had finished regular trading down 2 cents at $176.53.

Comments

[joebloom]

07:24 PM on 12/12/2010

You should also write about how companies like Living Social infringe on other companies’ trademarks to profit for themselves, and when caught don’t even pass the revenues to the companies’ whose trademarks they infringed upon. For example, Living Social ran a couple of deals with a teeth whitening company that called itself Beaming White USA, but which had no affiliation with the Beaming White trademark owner, which is Beaming White, LLC. Now Beaming White, LLC is going after Living Social for payment of the revenues generated by the deals they ran, but Living Social isn’t paying Beaming White, LLC even though they know they screwed up. Of course, the Beaming White USA people probably won't indemnify Living Social, leaving them holding the bag, plus the bad reputation they will get when people can’t redeem the coupons they paid for. These companies need to do better due diligence as to trademark ownership when it comes to selling products and services from other companies.

[eJoe]

11:36 AM on 12/12/2010

Liew said the funding was not a reaction to reports of an agreement pending Google-Groupon. Wall Street Journal All Things Digital blog reported Google had earlier offered up to 6 billion to acquire the company.

"We spend time thinking about the future growth of the company, not competing interests," said Liew.

Lightspeed first invested in the company while in April this year. LivingSocial annualized revenues already increased 10 times since, Liew said. The company says it has 10 million subscribers. Living Social http://usspost.com/living-social-24131/

[heroine addict]

12:12 PM on 12/03/2010

I resent being forced to declare that I "hate cupcakes" to opt out.

The truth is that I LOVE cupcakes, and HATE your stupid redirect ad.