Daily deal site LivingSocial launched their location- and time- sensitive deals today, ending up with overtaxed servers and lunch lines all over town.
LivingSocial is celebrating its launch of its new Instant Deals service today with $1 lunches in Washington DC. The DC-based daily deal site has augmented its site and applications so that it gives users a coupon prompt only during the lunchtime hours of 12 and 2pm, and only within a half-mile of participating vendors. These cafes and restaurants have given customers deals through this service for ten or fifteen dollars worth of food.
This event has certainly succeeded in sheer numbers - traffic increased to the point where LS has been unable to deliver timely confirmation vouchers and text messages. They have instead advised customers (via Twitter and Facebook) to give their name to the restaurant to look up manually. They have also deployed staff at locations to administer additional help and keep happy those hungry folks who have queued up for their dollar meal.
But as the price shows, this is meant as an attention-gathering event, not as an actual money maker. Far undercutting their usual fifty-or-more percent off discounts, this more dramatic move hopes to move the spotlight from Groupon, arguably the category's more well known company. So both LivingSocial and the restaurants that have a lot of work today - the usual logistics of delivering on a high volume day, with enough flair that customers will come back and pay the real cost.
Response seems slanted towards the negative at this point, with many low reviews of the Facebook App. Since LS put a high limit on deals sold, many restaurants were overwhelmed, and "fail" proliferates across its user review page.
This event occurs as LivingSocial confirmed a $400 million funding round, as the Wall Street Journal reports. But only half will be put into the company - $200 million will be used by investors to buy shares from founders and other shareholders. Groupon's last funding round brought in $950, and in a parallel manner, $573 million "went toward shareholder liquidity." With such a large cash difference, and Groupon Now's launch looming in the future, the LS new service's showy shove-off may attempt to keep DC's startup in consumers' minds.