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August 27, 2011

LivingSocial Traffic Surges, While Groupon Starts Slowing Down

Among the glut of daily deal sites that have emerged in Groupon’s wake, none is as serious a competitor to the group-buying site as LivingSocial.Most recently, LivingSocial completed a $400 million round of funding. Investor are valuing LivingSocial at $3 billion. The company is currently booking $1 million a day and is projected to book in excess of $500 million in revenue in 2011 and nearly double its market presence

Meanwhile Online intelligence firm Experian Hitwise is reporting that Groupon’s weekly U.S. traffic rates have dropped off by almost 50 percent last week since its peak during the second week of June 2011. Although Hitwise acknowledges that figure represents only web-based traffic but not include mobile or apps traffic.

However, based on the same rules above (web-based only in the U.S.), domestic visits to Groupon’s chief competitor LivingSocial has surged by 27 percent while Groupon's traffic  was down by 50%.On top of all of this, overall visits in the U.S. to daily deal and respective aggregation sites were down by 25 percent.

So why the big disparity between Groupon and LivingSocial? Even Hitwise can’t pinpoint an exact reason.  Yes, a survey from PriceGrabber revealed that approximately 52 percent of American consumers are overwhelmed by the amount of daily deal emails they receive. But that still might not entirely explain why one daily deal site continues to grow and the other does not.

As for Groupon, it could be flailing in reputation in the face of consumers amidst reports of unusual accounting schemes, costing business owners more money than they receive in return, and even bleeding money itself.

There’s also a big difference in the types of deals that LivingSocial and Groupon offer. The former usually publishes deals that have a little more value and respect. Groupon tends to send out anything it can get. This might be one of the reasons why Groupon is losing money and traffic when it wastes its time on these kinds of promotions.