Why Living Social's daily deal was no deal at all
It should have been the perfect money saver just in time for Christmas; instead, nearly two hundred Londoners paid up for a deal that seemingly wasn't a deal at all. Bitterwallet has learnt that Living Social, a daily deal website, offered customers a £20 saving on Christmas trees yesterday - trees which increased in price by exactly the same amount just before the deal was offered.
Daily deal sites have been all the rage in 2010, with Groupon the first and best known. Plenty of copycats have jumped on board and experienced varying degrees of success and failure - you'll be familiar with UK clone Groupola after our extensive coverage of their flaky iPhone4 deal and fake Facebook reviews.
Living Social is another US-based daily deal company which yesterday offered this deal for customers in London; "For only £20, you'll get £40 to spend on a spruce, fir, or artificial tree up to 12 feet in height - with potted and table top options also available".
The company offering the trees through Living Social was The London Christmas Tree Company. If customers chose the lower priced option, they effectively received a £20 saving on particular types of trees. For example, here's the price list for spruces from the website as it was yesterday:
However, here's the Google cache of the same page at the end of October:
Every one of the prices has increased by £20 at some point in the last month. And according to the Bitterwallet reader who alerted us to the story and has been monitoring the prices over the past several days, the prices changed yesterday - the day the deal appeared. We can't confirm that, although our reader also sent us screenshots taken in the past several days that show the lower prices - not only on these trees, but all trees on offer.
Were Living Social aware of the price hikes? The daily deal business model is very new, so at the very least the company would have had some input into how the deal was structured. Since deals need to be scheduled in advance, if the cost of product did rise by exactly the amount the deal was worth, presumably somebody would be likely to notice.
Living Social eventually sold 179 of these deals to customers; the order values will be at least £40 each, meaning over £7,000 in revenue. But who got the better end of this bargain?