Growth And Implications Of Social E-Commerce And Group Buying Daily Deal Sites: The Case Of Groupon And Livingsocial

Abstract

E-commerce has changed the nature of the value propositions that companies now offer to their customers. The convergence of content sites and social networks has resulted in emerging e-commerce business models. The group buying/local daily deals e-commerce platform represents the collective bargaining power that individuals can leverage to obtain daily deals on local products, services and “experiences”. These local discounted deals are distributed via e-mail and the websites of companies like Groupon and LivingSocial that have established themselves as the sector leaders. The convergence of traditional and electronic business models, as well as traditional and new business practices, are changing the face of global business as we know it. In this study, the authors critically reflect on the strategic management implications of the convergence of content, community and commerce in the form of social e-commerce and daily deal sites. The authors consider the implications of the rapid growth experienced by daily deal social group buying sites, in terms of strategy, and question its long-term value-creation. Future investors are urged to consider the long-term value-creation and not merely the short-term payoff of these sites. Merchants are urged to consider the practical implications of offering coupons on these sites for the day-to-day operation of their businesses.