Exclusive: LivingSocial Adding Real-Time Discounts Soon to Mobile Apps

Over the next couple of weeks, LivingSocial tells us, it will be adding real-time discounts to its mobile applications to enable consumers to search for discounts at nearby restaurants on the fly.

Likewise, it will give merchants the tools to find customers immediately should business get slow.

The service represents a big shift in the way daily deals are sold.

Instead of having to commit to a restaurant deal at least a day in advance, consumers can search for a discount in real time, on the way to lunch or dinner. And for merchants, it solves an immediate problem–it can offer a service right away, rather than selling a discount voucher that can be redeemed at other times.

The idea of walk-in deals is the latest evolution of the rapidly evolving daily deals space, which is fueled by stiff competition and millions (wait, scratch that), billions of dollars in venture capital.

“This could be a big next step in how people interact with local businesses. It’s a more efficient marketplace, and whenever you can do that, there’s potential for a lot of success,” said LivingSocial CEO Tim O’Shaughnessy.

The concept is brand-new for LivingSocial.

Just yesterday, it started approaching merchants about “walk-in” deals and plans to launch them in Washington, D.C., first, over the next couple of weeks. Soon after that, it will roll out the deals steadily across the country.

The service, however, is akin to efforts by others in the space, such as Foursquare, Gowalla and Facebook.

But matching a critical mass of merchants who are willing to make an offer at a particular location and time with a critical mass of consumers is extremely difficult to do.

O’Shaughnessy believes LivingSocial can check both boxes.

“From the merchant perspective, there’s a reason we invested so heavily in a field sales team–it’s so we could try new initiatives. Getting a density of merchants is going to be easier for us than other check-in deals stuff,” he said.

As for customers, he said, “We have a really big mobile presence already. We are in the millions on iPhone or Android apps. They buy through us and redeem through us, and we have an active user base already.”

LivingSocial, which is backed by Amazon.com, will spend the next few months educating merchants as well, O’Shaughnessy said.

To make it all work, the company will be testing out different platforms, including giving merchants iPads and other proprietary hardware. During the pilot, LivingSocial will pay for that hardware.

By getting the tools in their hands, merchants will be able to  spontaneously decide whether their lunch crowd isn’t big enough and create a deal on the iPad that is designed to get people through the door within minutes. Once created, the deal will be instantly pushed out, and could expire a couple of hours later, based on the merchants’ preferences.

As with other offers found on LivingSocial or its competitors, like Groupon, merchants may ask the customer to pay $3 for a $5 sandwich or salad, and the customer must buy the voucher up front from the mobile application.

LivingSocial’s very lucrative business model will remain the same for walk-in deals, O’Shaughnessy confirmed.

That means, if a consumer pays $10 for a $20 dinner, LivingSocial will take roughly half, or $5.

Once inside the establishment, consumers can always choose to pay more for additional items–a drink or bag of chips with that sandwich, maybe?