LivingSocial Launches E-Commerce, a Business Worth $200 Million a Year
Today, LivingSocial officially announced its first foray into selling physical products.
LivingSocial Shop is similar to the company’s original business, in that it will send an email to consumers, offering a limited set of products at a discount.
But unlike the rest of the Washington, D.C.-based business, which sells vouchers that are redeemed at spas and restaurants, these products will be delivered right to a customer’s door.
LivingSocial, which is owned partially by Amazon, has been experimenting with e-commerce in Cincinnati for weeks, and according to Yipit, which tracks sales across hundreds of daily deals providers, it could potentially be worth $200 million on an annual basis, once it officially goes live.
Here’s how Yipit did the math: It said LivingSocial tested 15 product offers over several weeks in Cincinnati, which earned $39,000. It estimates that once those offers are opened up to the company’s entire subscriber base, and assuming LivingSocial doubles the number of products for sale to 30, the business will ramp quickly to a projected $187 million in annual revenue.
To be sure, LivingSocial and Groupon have found it fairly easy to launch new categories, although not all are successful right out of the gate. But it helps that both have a subscriber base of folks happy to check out the latest discounts. Groupon launched an e-commerce service last year called Groupon Goods, and Yipit estimates that Goods already makes up 10 percent of the company’s North American business.
In slight contrast to what Groupon is doing, LivingSocial said the products it will be selling will be connected by a theme. For example, today’s theme is “Beach Bound,” and items for sale include water-resistant blanket and totes, water bottles, towels, beach toys and a collapsible gazebo.