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LivingSocial Confirms $175 Million Amazon Investment

20 points by andre3k1 16y ago

rokhayakebe 16y ago
These guys are building real businesses with revenue growing super fast. The beauty here is they saw a great business, Groupon, duplicated and raised bunch of money to grab market share.
- enjo 16y ago
  I would argue that they've improved on it. At least here in Denver Living Social is consistently more useful (particularly for my wife and our friends). Were GroupOn has been going to a lot of non-local website deals recently, Living Social manages to stay relevant. The wife was telling me that they're apparently trying to branch out into things like Vacations as well, which would be really cool.
achille 16y ago
Both Livingsocial and Groupon have lots of work ahead. They cover a large demographic which they need to partition and customize. If the deal I get in the morning isn't interesting to me, they failed. Ie: both services will regularly email deals about SPAs and hot stone masages, I would not expect many men to be interested by that deal.
unohoo 16y ago
$500 million revenues - is that their commission or is it the total amount they intend to bring in (including commission and sales) - there's a huge difference between the two. Assuming $500 mill is their total sales and their commission is 50%, this brings their 'actual' revenues to $250 mill - not a tiny amount, but not nearly $500 mill as well.
- jonknee 16y ago
  AFAIK that's not how revenue is typically calculated. Google for example counts all the money it gets from AdWords campaigns even if the clicks came out of AdSense, which means they didn't keep it all. In Living Social's case with a 50% split the revenue would be $500m and the cost of revenue would be $250m. Gross profit would then be $250m, from which operating expenses would be subtracted. Further subtract taxes and then you're left with net income.
- portman 16y ago
  You're using "sales", "commission", and "revenue" imprecisely/incorrectly. The money they collect from customers is "revenue". A portion of those revenues are paid to the local merchant. That is the "Cost of Goods Sold". The revenue minus the COGS is the "Gross Profit". So, in your example, then they would indeed have $500M in revenue, and $250M in gross profits.
mark_l_watson 16y ago
Good strategy, investing less than 1/25th of the money (as Google is considering) in a competitor of Groupon. I guess that Amazon has little chance of loosing money on this investment since LivingSocial is making money and this business space will grow.

20 points by andre3k1 16y ago

These guys are building real businesses with revenue growing super fast. The beauty here is they saw a great business, Groupon, duplicated and raised bunch of money to grab market share.

enjo 16y ago
I would argue that they've improved on it. At least here in Denver Living Social is consistently more useful (particularly for my wife and our friends). Were GroupOn has been going to a lot of non-local website deals recently, Living Social manages to stay relevant. The wife was telling me that they're apparently trying to branch out into things like Vacations as well, which would be really cool.

achille 16y ago

Both Livingsocial and Groupon have lots of work ahead. They cover a large demographic which they need to partition and customize. If the deal I get in the morning isn't interesting to me, they failed. Ie: both services will regularly email deals about SPAs and hot stone masages, I would not expect many men to be interested by that deal.

unohoo 16y ago

$500 million revenues - is that their commission or is it the total amount they intend to bring in (including commission and sales) - there's a huge difference between the two. Assuming $500 mill is their total sales and their commission is 50%, this brings their 'actual' revenues to $250 mill - not a tiny amount, but not nearly $500 mill as well.

jonknee 16y ago
AFAIK that's not how revenue is typically calculated. Google for example counts all the money it gets from AdWords campaigns even if the clicks came out of AdSense, which means they didn't keep it all. In Living Social's case with a 50% split the revenue would be $500m and the cost of revenue would be $250m. Gross profit would then be $250m, from which operating expenses would be subtracted. Further subtract taxes and then you're left with net income.
portman 16y ago
You're using "sales", "commission", and "revenue" imprecisely/incorrectly. The money they collect from customers is "revenue". A portion of those revenues are paid to the local merchant. That is the "Cost of Goods Sold". The revenue minus the COGS is the "Gross Profit". So, in your example, then they would indeed have $500M in revenue, and $250M in gross profits.

mark_l_watson 16y ago

Good strategy, investing less than 1/25th of the money (as Google is considering) in a competitor of Groupon. I guess that Amazon has little chance of loosing money on this investment since LivingSocial is making money and this business space will grow.