Jason Del Rey

Recent Posts by Jason Del Rey

Does LivingSocial Have an Identity Crisis?


After a rough first half of 2013, it’s still very much an open question whether LivingSocial will ever find sustained growth or reclaim its brief tech-darling status.

For now, the Washington, D.C., company announced a series of new features recently that it hopes will propel it in the right direction. Two of the biggest changes, though, will likely be viewed by some as knockoffs of products already rolled out by its main rival, Groupon, and online coupon site, RetailMeNot, rather than real innovation.

As a result, it’s getting harder and harder to decipher how LivingSocial is setting itself apart.

The most notable change is one that LivingSocial has been talking about for some time: Giving its merchants the ability to run promotions that can last for an extended period of time rather than just a few days, in the process creating a searchable marketplace of deals for shoppers to browse.

Sound familiar? That’s because the Chicago-based Groupon made essentially the same pivot last year when it launched its Deal Bank offering.

Some of LivingSocial’s other business-line expansions have also closely mirrored the Groupon playbook. There’s LivingSocial Shop for the discount sale of products, which followed the launch of Groupon Goods.

And there was a brief flirtation with offering a point-of-sale product for merchants, which followed Groupon’s acquisition of POS provider Breadcrumb. (While Groupon has expanded this offering, LivingSocial ended up parting ways with the exec leading their payments initiative and jettisoned the effort altogether.)

LivingSocial is also announcing a marketplace to search for online coupons from national brands — something that should be familiar to anyone who follows, or has shopped on, RetailMeNot, the shares of which are trading up more than 60 percent since it priced its IPO at $21 a share earlier this year.

Outside of these two big changes, LivingSocial also said it was drastically increasing the number of travel deals it offers and giving business owners who work with LivingSocial some additional tools to manage their campaigns and customer service. The Washington Post first reported on many of these changes on Monday.

When AllThingsD spoke to LivingSocial CEO Tim O’Shaughnessy last month, he said his company was developing more products in the next nine months than it had in the last two years combined.

Yet, at first blush, the new products only seem to contribute to the portrayal of LivingSocial as a compilation of other people’s ideas with a sprinkling of some smaller unique parts. That makes it harder to imagine how LivingSocial could convince shoppers to pledge brand loyalty to it over Groupon or others.

Perhaps that doesn’t matter and there is room for two big deals businesses over the long term, regardless of brand loyalty, although Groupon is still trying to prove that there’s a sustainable path ahead for even one.

And perhaps LivingSocial’s coupon site will rise up search results rankings and take a bite out of RetailMeNot.

In our conversation last month, I asked O’Shaughnessy and his exec team about the similarities between LivingSocial’s playbook and Groupon’s.

O’Shaughnessy and his CFO John Bax took the question as an opportunity to make the case for why they believe their deal management platform for merchants is superior. They also pointed out that LivingSocial hasn’t launched payment or restaurant reservation products like Groupon has.

The part they left out was that when LivingSocial has tried getting into businesses that Groupon isn’t in, the results haven’t always been great. Two separate food delivery businesses that LivingSocial launched flopped, and it recently shut down its LivingSocial Adventures local events business.

“I think that if everything we tried worked, that would be a very, very, unique situation to be in, and probably mean we weren’t taking enough risk,” O’Shaughnessy said in a follow-up interview to our original conversation.

That track record puts LivingSocial’s current management team in a tough spot. If it launches more unique products, it risks more failures and the company will only get so many swings and misses.

But if it continues to follow the playbook of others, the lack of differentiation may eventually catch up to it.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik