LivingSocial, a Chicago-based daily deals website that started in 2007 under the name ‘Hungry Machine’ revolutionized the eCommerce industry with a unique and profitable business model. What followed the company was an immense success and funding of $1.5 billion. The revenue? $512 million in 2020.

So what inspired the owner of LivingSocial to launch such an unfamiliar business? Its founder, Timothy J. O’Shaughnessy, has precisely answered that question in an interview with Business Insider. In his words, he and his partners were “trying to find the things that could go from one a month to 10 a month to 100 a month” in terms of revenue in millions.

One essential thing that made the creation of a website like LivingSocial possible was the technical background of its founder. Timothy was already developing web applications for Facebook when he came up with the idea of LivingSocial. His set of problems extensively focused on transitioning from an advertising-based revenue model to an eCommerce model for a daily deals business, instead of figuring out the technology and skill for the development of the trading platform.

However, today, the business owners interested in recreating the success of LivingSocial require an affordable solution that is feasible even for entrepreneurs from non-technical backgrounds.

Establishing a Business like LivingSocial

Let’s assume that the majority of readers are aware of the various LivingSocial clone scripts and online marketplace solutions. They can help a non-technical person create a website to sell daily deals and start earning. Even so, on a personal level, the owner will fail to recognize many underlying concerns such as poor website performance and ineffective administrative setup that will hinder his business operations. There will be a lack of proper direction that will ultimately result in poor implementation and lead generation.

Therefore, in this article, we have also discussed the clone scripts and daily deal marketplace solutions but before jumping on to them, let us understand the possible business and revenue model for a website like LivingSocial. These will provide you with the basic assumptions and expectations about how your business should work.

Understanding the Business Model

The business model of a daily deal website includes three main entities, which are:

Admin

The admin in the daily deals business model is the owner of the website, who earns a commission in every transaction. It means if you own a daily deals website, you are the admin. You can also hire people to help you with the admin work including content management, sales management, discount management, etc.

Merchant

Keeping LivingSocial and daily deals business aside for a moment, every multi-vendor business faces the problem of finding reputable vendors (or merchants) for its platform.

In locations where the concept of daily deals still hasn’t been introduced, you’ll find it most challenging to find and persuade merchants to sell their services/products on your website. Having said that, this business is also the most profitable in new locations where there’s no competition to drag you down.

While discovering a business model for LivingSocial, Timothy also faced the same problem. His business idea was new almost everywhere in the world but still, he was able to convince merchants to sell their services on his platform. Following is an excerpt from his interview in which he talks about how he persuaded merchants to begin his business:

So you know why merchants are important for your business. They provide you the deals that you sell on your website and earn a commission for. Some of the most preferable merchants that buyers shop on LivingSocial are:

  • Restaurants
  • Bars
  • Spas
  • Salons
  • Travel Agents
  • Hotels
  • Event Organizers
  • Electronic Shops
  • Fashion Stores

Buyers

Buyers are the consumers who will be purchasing the various services of merchants on your daily deals website. The reason why the majority of the buyers are attracted to these websites is because of the available discounts. However, some other reasons due to which buyers may find daily deals websites attractive are online booking, loyalty programs, cashback, etc.

To make buyers interested in your website, you will need to understand their motivation first. Below are some buyer personas which will help you.

  • People who are new to town: They can easily find trusted merchants on a daily deal website because of the availability of the reviews and rating features.
  • People looking for gifts: Daily deals websites significantly increase the gifting options for an individual. Along with products, one can also gift his loved ones a hot water jacuzzi or tickets to an adventure park.
  • Travelers: As travel agents and trip advisors have also started considering daily deals websites for conducting their business operations now, these websites have become an impressive option for travel enthusiasts. They can book hotels and trips at serious discounts.
  • General Shoppers: People who love shopping know-how and where to find the best pricing. They happily shop on daily deals websites.

About demographics, you can expect people aged 20-60 to shop on your website. On LivingSocial, the majority of the consumers are females, with 25-45-year-olds being the most active age group.

Admin, merchants, and buyers are the three entities on a daily deals website. Let’s put all the pieces of the puzzle together to give you a vivid step-by-step explanation of the business model.

Step 1: The merchant uploads his/her deals on the admin’s website

Step 2: The admin approves or rejects the deal

Step 3: Once the deal is approved, it is displayed to the buyers on the website

Step 4: A buyer purchases the deal and transfers the payment to the admin. 

Step 5: The buyer redeems the deal at the merchant via a QR code or coupon code.

Step 6: The merchant forwards the code to the admin who then transfers the payment to the merchant after deducting his commission. 

Understanding the Revenue Model

Have you ever thought that if daily deals websites are always providing discounts on different services, then how do they make money? After all, every owner needs to prove the profitability of his business to raise some funding.

Luckily, on a daily deals website, you can set up more than one revenue channel to increase your returns. Some of these are:

  • Commissions: The primary source of revenue in a daily deals business.
  • Google AdSense: You can display third-party ads and earn money via cost per click (CPC) and cost per mile (CPM). 
  • Featured Banners: You can charge money from merchants for displaying their advertisements on your website’s header.
  • Featured Listings: You can price the featured listing section on your website.
  • Affiliate Marketing: Along with commission for every on-site transaction, you can also promote and sell third-party products and earn a commission for the same. 
  • Monthly Subscriptions: You can set up paid subscriptions with different benefits for both merchants and customers to boost your income. 
  • Exclusive Partnerships: You can become exclusive partners with a brand to sell their products and charge for the partnership.
  • Referrals: LivingSocial also promotes its sales by providing discounts for referring friends. You can also do the same. 

With experience, you will find out more ways to increase your revenue streams and also strategize your marketing efforts around them. As a startup, you can select as many revenue streams you think will help you grow your business.

While your revenue streams will act as the key performance indicators to measure the success of your LivingSocial-like website, understanding the business model will assist you in the smooth administration of your business.

Using a Clone Script or Online Marketplace Solution

For many eCommerce enthusiasts, the terms clone script and online marketplace solution might be interchangeable, but it is more beneficial for newcomers to understand the difference between the two. Clone scripts are nothing more than a mere copy of a website or software that imitates the same functionality.

A major problem with a clone script is that it doesn’t do anything else. The imitation pretty much sums up everything about a clone script. Even the visitors would be able to tell that your daily deals website is a copy of LivingSocial with a few minor changes that are still discernible. Not to mention that as somebody else’s idea is behind the original design, somebody whom you cannot always contact, you won’t be able to understand and utilize your website to its maximum potential if you build it using a clone script.

Let’s move on to online marketplace solutions. They are an original and new entity. From the backend management panels to the frontend appearance, every feature is well-thought and introduced to increase the functionality and usability of the end product. Online marketplace solutions are unique and don’t make your website look like a cheap imitation of something popular. To help you understand their usage, online marketplace solutions also come with elaborative documentations that are much more useful than the fabricated ones that come with clone scripts.

In brief, online marketplace solutions are undoubtedly superior to clone scripts. They allow you to create something original, which becomes the unique brand identity of your business. One such marketplace solution to launch a daily deals website like LivingSocial is Yo! Deal – a product of FATbit Technologies.

It is a fully customizable solution developed after a careful study of popular daily-deals-based websites that also comes with a ready-to-launch default theme and 1 year of free technical support. For entrepreneurs who are seeing immediate scope in launching a daily deals business, the default theme is a very reliable option that only takes 2-3 days to set up your store. One of the reasons that make Yo! Deals such a lucrative option for many entrepreneurs is that it does not have any recurrent payments. You pay one time and get a lifetime license.

 Let’s discuss some of its important features in detail below. 

How Yo!Deals Work?

To help you start your daily deals business, Yo!Deals come with three different modules that assist in implementing the business model and maintain a smooth workflow. 

End-User Module/Buyers

This is the frontend interface that your visitors will see on your website and use to explore deals and merchants. Yo! Deals have a responsive front-end design that provides a seamless browsing experience on any desktop or smartphone. Some impressive features present in this module are:

  • Featured deals categories
  • Easy voucher redemption
  • User-friendly navigation
  • User profile creation and identity validation

Merchant Panel

Every merchant on Yo! Deals get an independent storefront that they can easily manage from a dedicated merchant panel. On this panel, the merchant can create new deals, check ratings and reviews, view sales reports, transaction history. Its top features are mentioned below:

  • Account management
  • Deals management
  • Location management
  • Sales and tax reports
  • Social media integration

Admin Dashboard

The admin exercises complete authoritative controls via a feature-loaded dashboard. He/she can manage everything from user accounts to deals, merchants, webpages, prices, and blogs. The admin also gets the option to enable/disable any deal or set up the charity and different revenue streams. The top features of the admin dashboard are:

  • Ready to use Content Management System
  • Charity management
  • Affiliate management
  • Tax management
  • User management
  • Ratings and reviews
  • SEO marketing tools

With all its three modules and an impressive range of features, Yo!Deals is a suitable option for all those entrepreneurs who are interested in launching a website like LivingSocial. They also do not need to explicitly program this marketplace solution and can start their business without any technological background. 

Final Takeaway

Due to the popularity of LivingSocial, a lot of entrepreneurs are interested in starting a similar business. However, without a clear roadmap and thorough research, it is difficult for an entrepreneur to set foot in this increasingly competitive industry. To resolve this problem, we suggest you target a profitable geographical region with a well-planned marketing strategy to establish a strong foundation in your startup stage.

Talking about technology, the right marketplace solution will not only help you launch your business in time but also provide various revenue models and effective marketing options to attract both merchants and buyers. It will streamline the management for the admin and provide a firm grip over the entire business.

Yo!Deals admin, merchant, and buyer demo are free to check on its official website. If you are interested, then you can take a look now.

Feel free to drop a response in case you want to clear any query or doubt.