Felicia Firdaus's Blog

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Last month, Amazon invested $175 million into Living Social and last year Google is rumored interested in buying Groupon. What’s so special about these 2 companies, why those 2 big named companies attracted to make partnership with them?

Living Social and Groupon are two of many companies who offer deal of the day business. Social buying has become a huge trend nowadays. In case you haven’t heard about what is social buying website is an online advertising business which offer a deal (usually one, bout could be numerous too) in a certain time of limit. The deal becomes eligible once it reaches a certain number of people purchase the deal.

By offering deals which are based on location, the ads target the market more effectively. In the other hand, the marketing scope of these businesses is wide. With a lot of people who subscribed to their sites, the advertising effect is measurable, the business are able to find out how many customer see their ads and how many people responded to the deals. In addition, the advertising’s cost is cheaper compared than putting ads in television or radio. However, with such a low entry barrier, the battle of social buying businesses is getting to heat up.

Because the field is generating high profit, it attracts other people to start the same business. Now there is tons of other same business. Some of the names are Homerun, Social Buy and Buywithme. For that reason, it is very crucial to develop a competitive advantage to differentiate themselves from the other competitors.

So far, in my opinion the strongest ones are Groupon and Living Social.Both of them control 90 percent of the online deal advertising market. Groupon’s competitive advantage is it has wide coverage. It has 150 markets in North America and 100 markets in Europe, Asia and South America.  Their site also has 28 languages. In the other hand, Living Social has come up with improving and developing its sites’ features. For instance,  recently they added the “escapes” where customers can vacation package deals. In addition, Bloomberg news reported that that Living Social is going to triple their employee in this year to increase their service level.

So is there any other strategies that you could think of that are needed for them to win the battle?