NEW YORK (
) -- While the buzz around social, local buying sites
has died down since
reported $6 billion acquisition talks with Groupon
last month, these daily deal sites are far from a fad, say analysts.
Groupon and LivingSocial, which offer users discounts on restaurants, spas and other services, are valuable, said David Card, an analyst with GigaOM Pro, because they've amassed large sales forces that work closely with local small businesses, most of which don't yet have an online presence.
LivingSocial CEO Tim O'Shaughnessy
With the local advertising market topping $130 billion, daily deal sites have attracted Internet giants like
and Google, who hope to tap this lucrative sector.
Groupon and its biggest rival, LivingSocial, together made up 90% of all local visits to group-buying Web sites for December, according to
And while Groupon made headlines recently for
, LivingSocial has achieved its own success. The Washington D.C. company, which received a $175 million investment from Amazon in December, says it generates more than $1 million in sales a day and projects that 2011 revenue will top $500 million.
Thursday, the company announced a new CFO, a former
executive John Bax.
LivingSocial's CEO Tim O'Shaughnessy recently spoke with
about his company's plans going into the new year, his competitors, and what he plans to do with Amazon's investment.
TheStreet: It's amazing how quickly the daily deals space took off in 2010. Did you have any idea how fast your company would grow?
I'd be fibbing a bit if I said I knew we'd go from 30 employees to over 600 in a year. Our user base has also grown drastically with over 12 million total users receiving our daily deals every day.
What type of expansion do you see this year?
We want to continue to expand rapidly. We're first focused on lots and lots of additional market launches. We're in 136 markets now
as of mid-December and we think we can double that this year. We're also in five countries now, and we think we can grow this quite substantially over the course of the year.
Additionally, we launched a few new products last fall that we want to put the pedal on more. We launched LivingSocial Family Edition, which are deals and events with local merchants targeted towards families and their kids, and LivingSocial Escapes, which focuses on weekend getaways.
We'll use our capital from Amazon to be more aggressive on these items, and new products that we think are showing a lot of promise.
You acquired Urban Escapes, a weekend getaway deals site, last year. Do you see continued M&A as part of your business strategy?
It's something we'll look at if it's the right opportunity. It's also worth noting we took a controlling stake in
Australian social shopping site
Jump On It
How will the company continue to distinguish itself from Groupon and other daily deals sites?
We're more about social commerce than anyone else out there. We have our roots in Facebook
LivingSocial originated as a Facebook application development company, which we think gives us an advantage.
Do you see the daily deals space as a winner-takes-all market or is there room for several different players to compete?
There are two category leaders right now. There could be room for some niche players, but if you look at six months ago, 90% or more of all transactions in the space were going through one or two players. The same has held true last month.
The smaller players have a hard row to hoe. I don't know if they can craft out niches, but that's certainly what they're trying to do.
--Written by Olivia Oran in New York.
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