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  • LivingSocial’s Sweet Deal: $10,000 Penthouse Suite

    Daily-deal sites are going upscale.

    Coupon sites LivingSocial and Groupon are moving upscale from small-ticket items to compete with the likes of Expedia and Gilt City

    LivingSocial heralded a new era last month when it offered a $10,000 coupon for a penthouse-suite package at San Francisco’s Fairmont hotel: Daily-deal sites are going upscale.

    After getting started on small-ticket items—cupcakes, manicures and yoga sessions—LivingSocial and its larger rival Groupon Inc. are pursuing buyers willing to spend hundreds or even thousands of dollars on travel and luxury goods.

    The move upmarket is putting Groupon and LivingSocial on the same turf as travel companies such as Travelocity.com Inc. and Expedia Inc., as well as luxury sites like Gilt City. Daily-deal sites also are trying to grab more of the money heading to Amazon.com Inc. and other e-commerce stores. A typical daily-deal user pays $20 to $50 on the specials—far less than the average of $100 per transaction spent at online retailers, according to Forrester Research Inc.

    “We are finding that people move up and down between categories: Sometimes they want a sandwich, and sometimes, a $100 meal,” Rob Solomon, president of Groupon, said in an interview. “There’s a lot of interest in the luxury category.”

    That means offering high-end hotel rooms, airfare discounts, cruise specials and wine tastings. In the future, Groupon and LivingSocial also may sell computers, air-conditioning tune-ups and golf lessons, said Peter Krasilovsky, a vice president at BIA/Kelsey, a Chantilly, Virginia-based research firm.

    Lasik Surgery

    Groupon, based in Chicago, has already sold $499 Dutch bicycles and $2,000 Lasik surgery. LivingSocial’s Fairmont deal in February, which offered a 50 percent discount on a $20,000 suite and additional perks, was its most expensive deal ever. The promotion included a one-night stay at the hotel’s 6,000- square-foot penthouse and a one-day rental of a Maserati Quattroporte. LivingSocial, based in Washington, D.C., sold 115 coupons for the offer.

    http://www.businessweek.com/technology/content/mar2011/tc2011038_167209.htm

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