Groupon & LivingSocial Offering More Big Box & Online Deals

In December 2009, Michael Arrington from Techcrunch described Groupon as, “They offer users deep discounts on local deals – spas, sky diving lessons, hotels, restaurants, golf, whtaever. Discounts range from 40%-90% of the normal price.” And for a good period of time thereafter, the deals were local. But it seems these days both Groupon and LivingSocial are pushing more and more big box and online deals through their respective group buying services.

Last summer Groupon launched what I think was their first national deal with the Gap. This year we’ve seen a large number of nationwide deals including Groupon’s Barnes & Noble deal,  LivingSocial’s Amazon gift card deal, Redbox, Blockbuster Express and Groupon’s eBay deal. Today Groupon is offering a deal with Domino’s pizza – a deal which has made a number of Jewish people angry since it’s Passover and eating items like pizza isn’t allowed. Living Social is currently running a deal with business card printer Vista Print.

Tomorrow Groupon will run a deal with General Mills – for $20 you get a few boxes of cereal, some other grocery items, a coupon book and a can of corn.

I think the nationwide and big box expansion has pros and cons for both Groupon and Living Social. It’s a brilliant marketing strategy — by offering a deal with a very popular retailer, it allows both services to draw in new customers (and email subscribers!) at a faster pace than just offering 50% off a mani-pedi or two-tacos for the price of one. These deals also offer more variety which can help keep email subscribers more engaged because they might find a big box deal that interests them. Lately I’ve been hearing more chatter that the deals are getting a bit stale – how many times can you eat burritos or get your toenails clipped?

The potential downside (and this is just a guess, I have no evidence of this) is that the big box and national retailers can most likely haggle with Groupon and Living Social to reduce the fees and costs of running a campaign significantly by putting pressure on both group buying services using the marketing strategy I noted above. Does this mean smaller, local shops that want to use either service might be forced to pay the full fees and commissions to both group buying services? Or do the national deals help both services with the bottom line so that there is more flexibility with regards to fees and commissions for the local merchants?

One thing is for sure, the idea of local-only deals on both services is a thing of the past.