LivingSocial may be less than half the size of Groupon in terms of gross revenue, but a new report from daily deals tracker Yipit reveals that LivingSocial's gross revenues grew 32 percent in September, compared to 6 percent growth for Groupon.
Yipit estimates that Groupon made $8.1 million more in September than in August, while LivingSocial sold $59.3 million worth of deals in September, an increase of $14.6 million from August. What was responsible for LivingSocial's meteoric rise in deal sales? Whole Foods.
In early September, LivingSocial launched a nationwide deal with Whole Foods, which was the company's first grocery deal for the entire country. The offer let shoppers buy $20 worth of products at Whole Foods for $10. LivingSocial spokesman Andrew Weinstein said the Whole Foods deal was the company's fastest-selling offer ever, with about 30 deals sold per second.
Even when the Whole Foods deal is removed from the equation, LivingSocial still grew more than Groupon in September. LivingSocial would have demonstrated 10 percent growth, compared to Groupon's 6 percent growth.
If anything, LivingSocial's tremendous surge demonstrates how powerful nationwide deals can be. Groupon similarly launched a national deal for Gap last year, where users received $25 off a $50 purchase at the clothing retailer. The deal was extremely successful. Groupon sold an average of 10 deals per second, a total of 400,000 Groupons.
As a whole, the daily deal industry grew 12 percent in September to a total of $266.6 million in gross revenues, which was faster than August's 9 percent growth rate for the industry.
The daily deals industry currently makes $3.2 billion annually, which reflects gross revenues and not direct revenues each company gets after it splits the value of each deal with merchants.
Groupon and LivingSocial make up 76 percent of the daily deals industry, but other competitors are catching up. TravelZoo, the No. 3 player, grew 37 percent, while AmazonLocal grew 177 percent and Google Offers grew 236 percent. In all likelihood, TravelZoo will be booted from its spot next month by either Amazon or Google.