Only weeks ago, group coupon powerhouse Groupon.com was gearing up for a $6 billion acquisition by Google—before reportedly rejecting the offer and raising a record-breaking $950 million in venture capital. The Chicago-based startup dominated the deal-a-day market—that is, until competitor LivingSocial crashed the scene with a $175 million investment from Amazon.
Now, says a new report by Experian Hitwise, LivingSocial is fast catching up to Groupon. In a space built on delivering the best deals and discounts, will Groupon ever be able to maintain brand loyalty if its fickle and frugal consumers can find better deals elsewhere?
According to Experian Hitwise, LivingSocial's traffic surged 80% last week, while Groupon's plummeted 20%. The ballooning visits—up 254% recently compared to 10% for Groupon—is thanks to its partnership with Amazon, which created big buzz by offering a huge discount that attracted millions of users to LivingSocial.
"In December 2010, the US visits to Groupon.com outnumber those to LivingSocial by a factor of 10-1," the report reads. "At the time Experian Hitwise commented that LivingSocial.com was a site to watch given its strong representation of early adopter visitors. Fast forward to last week. LivingSocial.com has closed the gap, now with over half the visits of group coupon leader Groupon.com."
The question now is whether LivingSocial can continue to close the gap, or whether consumers will bounce back to Groupon next week. Without such lucrative support from Amazon, will users continue to deal with LivingSocial?