LivingSocial Works Out Some Kinks After Blockbuster Amazon Sales

LivingSocial is still fulfilling orders, processing credit cards and answering customer questions related to the 1.3 million Amazon gift cards it sold last week at 50 percent off.

The kinks in the system appear to be fairly minor, but they show that despite the attention and money funneling into the group-buying space, it may not be ready for prime time. The Washington, D.C.-based business also hinted that it sold more than it had expected.

What’s more important is the way LivingSocial handled it all.

Will first-time customers be left with a bad first impression, or will LivingSocial become a trusted brand for both consumers and merchants going forward?

Within the 29 hours the deal was offered, LivingSocial sold 1.3 million vouchers that cost $10 each for a $20 Amazon.com gift card. That breaks down to a ridiculously fast rate of 85 sales per second, which strained the company’s systems, including confirmation emails, credit-card charges and a very busy customer service team.

The problems arose almost immediately and persisted throughout the weekend.

To handle the influx of inquires, LivingSocial updated its help page with a designated link to answer questions specifically about the Amazon.com gift card voucher. For example, it told customers: “Due to the overwhelming success of the Amazon.com gift card deal, confirmation emails may be slightly delayed.”

A company spokesperson said at this point there should be no more lingering problems, but that “because of the sheer amount of sales, it took longer than normal.” Overall, on a percentage basis, the number of customer care requests were on par with a normal deal, she said.

LivingSocial’s Twitter feed tried to get out in front of customer complaints by directing them to the help page and confirming that customer service reps were working hard to get back to everyone in a timely matter.

Still, that didn’t prevent customers from filling up message boards with questions or concerns. One discussion group, created Jan. 20 on Amazon.com, had 161 posts as of today, and was titled “Anyone get scammed by Living Social?”

Many of the customers on the message board intially thought the deal was too good to be true. Then as the deals were purchased customers were concerned because their credit cards hadn’t been charged yet, and they hadn’t received email confirmations.

Customers also discussed how to buy more than one gift card despite the one-per-person limit. Many said they had tried, but ultimately LivingSocial canceled all but one. In the end, LivingSocial said 1.25 million of the 1.3 million deals had been verified and delivered.

In the company’s help section, the first two questions addressed the issue of delayed email confirmation and receipt of a redemption code. The other eight questions related to how the service works on any other day, such as instructions on how to receive a gift card for free when three of your friends also buy the voucher.