Starbucks Corp., the world's largest coffee chain is in the limelight for introducing daily deals for its customers through daily deal company LivingSocial, which happens to be Groupon Inc.'s main rival.
Starbucks, in collaboration with LivingSocial, will be offering a $10 Starbucks gift card for $5 on Wednesday. The best thing about this deal is that customers have six months to claim the card, which can be used across the country. This information was provided by company executives to Reuters. The members who are on a rewards program will get an email about the deal Tuesday evening.
Startbucks and LivingSocial have big plans. They are targeting to sell at least a million deals. LivingSocial offers new deals each day to its members who subscribe via email. After a deal is purchased, members are e-mailed their redemption vouchers the following business day. Starbucks will en-cash on a similar business model while working in collaboration with LivingSocial.
LivingSocial also has a referrals program that makes it very easy for members to purchase the offers. The members can either print out their vouchers or download the LivingSocial app on their Android, iPhone, iPad or iPod to redeem. Starbucks hasn’t really revealed whether they are utilizing the referrals program, but if they do, they would certainly sell more.
LivingSocial, part owned by Amazon.com Inc. (AMZN.O), in 2011, completed a $400 million round of funding, valuing itself at $3 billion. Their equity is increasing, while on the other hand share prices of Groupon (GRPN.O), the world's largest daily deal company and the main rival of LivingSocial, have gone down since the last IPO. Groupon stock hit a record low of $4 on Tuesday. It was unchanged at $4.15 in afternoon trade.
The company has also lost some important employees who were serving at an executive level. Starbucks Chief Executivewas on Groupon's board of directors and his Maveron investment firm was an investor in Groupon before the company’s last IPOs were issued.
Adam Brotman, Starbucks' chief digital officer, said the company's decision to work with LivingSocial shows that daily deals still work for some merchants. He further added, "It's an evolving space," "The type of deal, the type of merchant and the implementation of offers are going to be different from circumstance to circumstance."