LivingSocial, the social commerce leader behind LivingSocial Deals and top Facebook applications Visual Bookshelf and Pick Your Five, today announced that it has completed a $25 million Series B round of venture funding led by U.S. Venture Partners, with Grotech Ventures and Steve Case’s Revolution, LLC participating. With this round of funding, LivingSocial Deals is launching in four additional cities: Chicago, Denver, Raleigh Durham and San Diego, making the program live in 13 markets across the country, growing to dozens of cities by year-end. By signing up for LivingSocial’s free daily online service people are saving an average of 50-70% at their favorite places . . .
The company, which was a social networking effort of sorts, has now reinvented itself effectively with its group-buying effort: LivingSocial Deals.
However these group buying sites are now springing up every other day. All you need is a wordpress blog (essentally) and a telepone to start dialing for dollars. Often the discounts, as the PR copy above indicates, are very steep. What that means in the most extreme cases is that the SMB may break even or even take a loss in exchange for new customers and the hope of lifetime value, depending. In many cases the merchant does make a profit and is able to book revenue ahead of fulfillment.
These channels work very effectively and consumers love them for obvious reasons. But merchants are often ambivalent because of the “costs.”
Enter another site that I just became aware of called SyncFu. According to the email I received, it works in 50+ countries and seeks to empower the merchant directly as a platform:
SyncFu assists sellers, allowing them to offer their selected products on group selling at their web site through an embeddable widget. There are no intermediaries, and no percentage fees charged. The system utilizes micropayments to make reliable pledges / reservations for later purchase after the deadline for signing up expires.
There are no target quantities / total values, as the price of units drops proportionally with each reservation, and all accordingly to the quantity/price relations the seller specified at syncfu.com. Cost of making reservations depends on the country/operator as it is made via mobile phone, and is in the range of $1 – $3. After the operator fees, this charged fee is kept by SyncFu for its services, which is insignificant to the total value, does not represent cost for the seller, and for the buyer it is a ‘dissolving’ cost.
After the deadline expires, each reservation holds own discount code, and the seller has the flexibility to choose how to request the full payment of lowest achieved amount. It can be through own web shopping cart, through physical visit, or via email tool . . .