19th Nov 2010. Living Social announced today that it invested nearly $5 million for a 31% stake of Jump On It, one of Australia’s leading social shopping sites. This means that LivingSocial’s deals are now available to people in Australia, Canada, Ireland, the UK and the US.
The daily deals formerly available on Jump On It will be folded in to the LivingSocial’s brand, and will offer Australians the chance to buy one daily deal at more than a 50% discount, as well as a bonus side deal. These deals are expected to reach more than 1.2 million Australians through the website and Facebook.
Founded in 2007, Living Social advertsied its first deal in 2009. To date (updated April 2011) it has secured approximately $600m in investment, with a signifiacnt amount from Amazon, and is valued at over US$3bn. LivingSocial reaches more than 10 million subscribers in over 100 markets with their daily deals, and is estimated to be earning $1 million a day. The company projects that it will earn well over $500 million in 2011.
Living Social’s investment comes as the group buying scene in Australia hots up, with other players including Cudo, Spreets and Scoopon fighting it out for market share.
Eric Eichmann, COO of LivingSocial, said
“Having Jump On It as part of the team is an incredible opportunity for us to get started in Australia, and to offer our curated experiences to more consumers in more locations. We’ve had extraordinary growth this year – and we continue to look for opportunities to grow even further, both domestically and internationally. Our growth and revenue numbers are clear indicators that our business model, our relationship with local merchants and our customer service make us the top choice when consumers seek unique experiences in their area.”
Chief executive Colin Fabig says the company’s race for capital was triggered by the expansion of rivals, including Cudo, Spreets and Scoopon.
“Basically, we’ve started thinking about getting some money or strategic investment for quite awhile now, given that we have had some more competition from the major sites in Australia.”
“The biggest barrier to entry in this business is scale and capital, and to get that we need some money. So eventually we had two companies bidding for us overseas, LivingSocial and another company.”
The company will now operate the LivingSocial.com platform in Australia alongside the Jump On It platform as well. Fabig says this will differentiate the site from its competitors, as users will now receive multiple deals for their city.