Daily Dealer Travelzoo Sees a Marked Improvement in Billings – Competition Intensifies
Improved billings – lack of loyalty – increased competition
November numbers are in for Travelzoo (NASDAQ ticker symbol: TZOO) and the company registered a solid 44% growth in local deals gross billings. This is a significant increase over October billings and places the company in third position trailing only Groupon and LivingSocial in terms of dollar gross billings for the month.
The TREFIS article states that they believe “a major threat to Travelzoo Local Deals is that its business model is very easy to replicate. This has spawned a large number of deal-based clone sites that provide similar discounts to subscribers.” The article also sources the Susquehanna/Yipit survey. In a nutshell, that survey stated that “businesses that have offered an online deal-of-the-day in the past aren’t planning to do so again in the next six months due to concerns on low rates of repeat business from new customers.”
It’s really the same argument that has been verbalized ad nausea. Low barriers of entry, more competition, and lack of customer loyalty…yada yada yada. Travelzoo is not stupid. They went into the deal space with their eyes open. The company continues to differentiate itself by leveraging its existing relationships with hotels to offer high-end deals. It also relies on its other travel-advertising and search products to boost volumes for its local deals segment.
Travelzoo continues to expand its local deal offers via the ‘Getaways’ business model. That platform produces a larger amount of revenue as the ticket items are typically much larger. Travelzoo contends that its approach to daily dealing is very difficult to replicate owing to its rigorous deal quality standards. We have touched on this in several Daily Deal Media posts how important quality standards are.
The TREFIS post re-iterates how competitive the social buying space has become. The article estimates that there are over 200 social buying site clones in the U.S. alone and over 500 worldwide. I think those numbers are way off. Our sources show somewhere between 400 and 600 U.S. sites and literally thousands world wide.
There is always the possibility of eroding take rates (percentage of gross revenue kept by group-buying platforms). Daily dealer Kgbdeals charges 15% from merchants verses the 40% charged by Travelzoo. Competitive pressures like those could lead to a decline in take rates charged by Travelzoo over time. In the meantime, the growth rate of this portion of Travelzoo’s business model continues to be stellar. I am looking forward to their December numbers as well as 2012.
Source: Trefis
LivingSocial? More like GivingSocial!
LivingSocial gives members a big reason to shop with them this holiday season.
With every purchase starting today through the 16th, LivingSocial will be giving a gift to charity through their third annual 12 Days of Giving program. The charity that will benefit from one percent of every sale is the historic, respectable U.S. Marine Toys for Tots Foundation. In addition to that, LivingSocial will donate one percent of proceeds from select international companies to support projects that are part of the GlobalGiving community.
Jake Maas, Senior Vice President of Consumer Business for LivingSocial is excited about continuing the program that brings joy to so many needy children.
“For the third year in a row, our 12 Days of Giving program will help improve the lives of those in need throughout the U.S. and internationally,” he said. “As a company dedicated to local commerce, we’re excited to be working with worthy organizations that can directly help local communities, so part of the money you spend on great deals in your hometown goes to a charity doing great work for those in need in your hometown.”
LivingSocial is very proud to have such a large international presence and will spread the wealth accordingly. Along with pairing with the Marine Toys for Tots which delivers not only new toys, but hope to less-fortunate children, they’ll take their charity to countries where they also have a large presence.
Money raised in Australia, New Zealand, France, Canada, Ireland, UK, the Netherlands, Dubai and Lebanon will benefit projects vetted by
GlobalGiving, an organization connecting people with local causes and projects in over 100 countries. During the 12 Days of Giving, LivingSocial will support GlobalGiving projects in participating countries based on the total proceeds from Daily Deals sold.
The U.S. partnership with Toys for Tots marks the second time this season LivingSocial is supporting the organization. In November, Toys for Tots participated in its first-ever daily deal, which was matched by generous contributions by Toys for Tots corporate partners.
“Currently 16 million U.S. children live in poverty,” said Lt. Gen. Pete Osman, USMC (Ret), president and CEO of Marine Toys for Tots Foundation. “Partnering with LivingSocial will enable us to provide a brighter Christmas holiday season for many additional children this year, as donations from LivingSocial members’ purchases will reach down to the local communities that need our help.”
Donna Callejon is the Chief Business Officer for GLobalGiving and is honored to be working with LivingSocial. “By engaging its members around the globe, LivingSocial continues to support important causes internationally,” she says. “Projects being supported by LivingSocial range from making wishes come true for sick children in France to funding ongoing rebuilding after the Christchurch earthquake in New Zealand.”
Not only is LivingSocial making it easy for members to give to charity (at no direct cost) they’re making gifting easier in general by rolling out two holiday gift programs.
Members can use Gift Wrap for any LivingSocial deal they gift to others. For $2.99 LivingSocial will beautifully print and package the gifted voucher, which includes a personal message from the gift giver, and will send it directly to the gift recipient. (cue: *aawwww*)
If just a single gift voucher isn’t enough to give, the company’s newly-launched Gift Box is a complete restaurant ($49), spa ($99) or travel ($199) experience in a box and available in certain U.S. markets. Each box contains a variety of offers from merchants in a specific category from which a recipient can choose one to experience. It is the perfect gift providing gift givers peace of mind knowing they’ve given a complete gifted experience in a specific category the recipient will love.
Sounds like LivingSocial is really making holiday shopping easy, especially considering all the statistics that say people are more comfortable buying discount vouchers for loved ones this year.
Find out more about Global Giving here and more about Toys for Tots here.
Happy Giving!
Source: PRNewswire
LivingSocial Testing Subscription & Bonus Service
LivingSocial has announced its latest attempt to get customers to buy deals on a more 
regular basis. It’s like pre-pay VIP access, and it could prove to be positive for business.
The program is called “Living Social Plus” and it works like this: For $20 a month, members get $25 in “Deal Bucks” credits that are automatically applied to their next purchase as well as access to closed deals. To entice customers to look into the new service, when customers check out, LivingSocial has started putting a graphic that shows the price of the currently viewed deal instantly reduced by the $5 in bonus Deal Bucks, next to what the customer is paying for their deal.
A subscription deal like this could help eliminate the problem of deal cruisers; people who only stop by to purchase especially rare or relevant deals. If a program like this establishes itself as valuable and easy to use by customers, and produces a consistent revenue stream, you can expect other deal companies to follow suit; quickly.
LivingSocial hasn’t officially launched LivingSocial Plus, it’s still in beta testing, so users not in the test group are still redirected to the regular LivingSocial website, but this article confirms its existence. The pre-paid membership service started offering deals to the test group on Black Friday. Previously the only way to earn Deal Bucks was to invite friends to the service. The deal provider has been aggressively innovating in search of new models that could save it from the decline impacting Groupon. It just launched LivingSocial Instant and Room Service last month that lets people get discounted food delivered on demand.
The $20 that customers paid to be a member are good for purchasing deals for 5 years, but the $5 in bonus bucks are only good until the end of the month, which creates a sense of urgency to actively look for and buy deals. The whole daily deals model is built on the notion that perceived value exceeds what users have to pay, even if they’re paying for things they don’t need. Meanwhile, it’s really the deal providers that could win since most purchases net them far more than $5.
Could this pre-pay deal model work? According to TechCrunch, access to closed deals is a great addition to the subscription package, since buyers may be willing to pay for it but it doesn’t cost providers anything. LivingSocial may have figured out the next big thing in daily deals.
Paying $20 in hopes that you’ll soon find a deal that you’ll want? Might people subscribe after seeing a deal they want expire, in hopes they’ll have access to it? How badly would you have to want a deal to do that?
Source: TechCrunch
