Growth And Implications Of Social E-Commerce And Group Buying Daily Deal Sites: The Case Of Groupon And Livingsocial

Abstract

E-commerce has changed the nature of the value propositions that companies now offer to their customers. The convergence of content sites and social networks has resulted in emerging e-commerce business models. The group buying/local daily deals e-commerce platform represents the collective bargaining power that individuals can leverage to obtain daily deals on local products, services and experiences. These local discounted deals are distributed via e-mail and the websites of companies like Groupon and LivingSocial that have established themselves as the sector leaders. The convergence of traditional and electronic business models, as well as traditional and new business practices, are changing the face of global business as we know it. In this study, the authors critically reflect on the strategic management implications of the convergence of content, community and commerce in the form of social e-commerce and daily deal sites. The authors consider the implications of the rapid growth experienced by daily deal social group buying sites, in terms of strategy, and question its long-term value-creation. Future investors are urged to consider the long-term value-creation and not merely the short-term payoff of these sites. Merchants are urged to consider the practical implications of offering coupons on these sites for the day-to-day operation of their businesses.

A Social Networking-based Advertising to Enhance Customer Reach Target

“…LivingSocial is an electronic commerce marketing firm that offers daily deals to a wide customer base through emails and Internet advertising [14]. To get the promotion on the website, the firm will contact the business owner and propose them to join and promote their products with the reasonable discount rate.…”

Attitudes, Perceptions, and Responses of Purchasers Versus Subscribers-Only for Daily Deals on Hospitality Products

“…Edelman et al (2011) also pointed out that the total cost to a merchant offering daily deals can be nonlinear where cost goes up when a merchant nears capacity or is oversubscribed (e.g., more customers than it can handle; full-paying customers feeling they were underserved; or deal customers not planning to return because they felt short-changed). With smart planning in the deal offer and restrictions, these costs could be avoided or minimized (see recommendations by Hughes & Beukes, 2012). For some deals, such as bee-keeping seminars, the cost curve may flatten out (i.e., cost increases marginally with 3 or 5 more deal participants joining the seminar planned for, say, a dozen customers; but revenues may be higher from after-seminar sales).…”

Development of group buying in Turkey: shopping on Daily Deal websites

“…(Beiles et al, 2012;Hughes & Beukes, 2012;Steiner, 2010). Since no other company has ever managed to grow faster in such a short time, Groupon became both the world---wide leader of the deal---of---the---day market and very attractive for some of the big technology companies.…”