LivingSocial, the second largest American group purchasing website, comes to death ends and plans to sell itself to Groupon after several job cuttings.
Groupon is known to all, while many of us learn little about LivingSocial. LivingSocial has raised funds of about $ 930 million so far. Its value of assessment once reached $ 6 billion. LivingSocial and Groupon once obtained over 80% of American market share together in this field.
LivingSocial did not reveal the acquisition amount yet. After all, it is not a good news to sell itself to rival.
The original of LivingSocial was called Hungry Machine. It was established by 4 co-founders in 2007, they are Aaron Batalion, Tim O’Shaughnessy, Eddie Frederick and Val Aleksenko. It specialized in launching apps associated with Facebook application, such as voting app. Then it turned its business to promote sales emails to clients for merchants. They renamed Hungry Machine as LivingSocial in 2009.
LivingSocial started the massive expansion when it began to do group purchase business. It spent a lot of money for tv advertisement to enhance its popularity and acquired startups in many countries to quick up the expansion in new markets. It added many new products category for group purchase such as traveling and food delivery to strengthen competitiveness.
What LivingSocial did was to obtain more users and expand market. Though LivingSocial competed hard with Groupon for financing and expansion, it was still beated by Groupon.
LivingSocial once made deal with Amazon to power its competitiveness. Amazon invested $ 175 million on LivingSocial to hold 31% of its share.
In 2012, the value of assessment for LivingSocial reached $ 6 billion. However, its value of assessment declined under $ 1.5 billion one year later.
Though Amazon invested it, it faced pressure to make profit. The revenue of LivingSocial in 2012 was $ 387 million, however, the total loss was $ 767 million. Its performance turned better in 2013, with revenue of $ 384 million and loss of $ 110 million.