Talk about getting hand-tossed.
In a head-to-head battle with daily deals behemoth LivingSocial Inc., tiny upstart SalesVote Inc. wanted to offer a deal on the same day for a popular Connecticut Avenue pizza joint — 70 percent off the pies versus LivingSocial’s 50 percent discount at Comet Ping Pong on Dec. 2. When LivingSocial complained, Comet had to choose which deal to run. It went with LivingSocial.
The incident highlights a vexing question for the daily deals industry: When, and how, to mandate exclusivity with merchants? There are only so many restaurants, nail salons and painting classes out there. Those businesses have no shortage of deal providers to choose from, and overlap is inevitable.
Groupon Inc. , the No. 1 daily deals company and LivingSocial’s primary rival, has taken criticism for locking merchants into long-term exclusivity contracts, a practice LivingSocial CEO Tim O’Shaughnessy has described as “a little backwards.” O’Shaughnessy’s company, however, does bar same-day competition — it’s forbidden in LivingSocial’s terms of service with merchants, says spokesman Brendan Lewis, a rule he says is meant to protect the businesses by preventing floods of discount seekers.
Comet’s owner accepts blame for the simultaneous deals. But James Alefantis says his business is equipped to accommodate the customer traffic that daily deals generate and has the cost structure to afford the discounts.
SalesVote, meanwhile, is testing out new business models — offering merchants free marketing bundles and cash to the last customer to share a deal over Facebook or Twitter each week. “I do not see a conflict” with LivingSocial, says CEO Zak Kidd. “Our platform is different. We give out money everyday. No one else does that.”
Source Washington Business Journal