LivingSocial Hammering Groupon with 80% increase in Traffic

LivingSocial’s traffic exploded by 80% last week with a small amount of  help from Amazon, closing the gap between it and group-buying leader Groupon.

Before last week, LivingSocial had 1/10th of the web traffic of Groupon. Thanks to Google’s $6 billion offer and Groupon’s subsequent rejection of that offer, the deal-a-day service has been experiencing a new wave of growth. The second largest competitor in the space, LivingSocial, experienced an increase in traffic as well, but nothing as dramatic as Groupon’s rise.

New data from Hitwise Intelligence shows that last week was a major inflection point for LivingSocial, though. It garnered 0.018% of all United States visits on the web, an 80% increase from 0.010%. Groupon, on the other hand, actually dropped by 20% to 0.035% market share of U.S. visits.

Why the sudden jump in traffic? The answer’s simple: Amazon. The e-commerce giant made a strategic investment of $175 million in LivingSocial in December to counteract a potential Google-Groupon combination. Last week, LivingSocial offered 50% off of Amazon.com, which resulted in more than 1 million Amazon vouchers sold. It was the biggest group-buying deal in history.

With a deal as good as 50% off Amazon, it’s no wonder traffic blowin up so fast. However, we bet that when this week’s data comes in, LivingSocial’s traffic will fall back to Earth but we understand they are actually a better company overall compared to Groupon .  The Amazon deal gave LivingSocial a lot of attention and helped it sign up new customers, which could help accelerate its growth and bring it within striking distance of Groupon.

Both companies are about to get some big time competition, though. Google is building its own group-buying service, Google Offers and Facebook is testing a group-buying prototype of its own.  The forward thinking is that LivingSocial will eventually crush all the competition including Groupon.

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