Daily deal site LivingSocial announced today it acquired three international deal sites, giving Groupon a run for its money in deals markets abroad. In its first move into Asia, LivingSocial purchased Ensogo, which provides deals to Thailand and the Philippines, and DealKeren, which provides deals in Indonesia. It also made a major play in the Middle East (a market Groupon has historically had trouble winning over) with its purchase of GoNabit. These acquisitions, along with an announcement the company will now provide deals in the Netherlands, brings the total number of countries in which LivingSocial operates to 21.
Daily deal companies first found success in major U.S. cities and then spread to smaller regions in the U.S. With a now saturated U.S. market, international expansion is the clear next step. Ensogo (barely a year old and parent company to DealKeren) is a top social shopping website in Thailand, Philippines, and Indonesia, serving more than 800,000 members and was backed by Rebate Networks. United Arab Emirates-based GoNabit, founded in January 2010 and operating in UAE, Kuwait, Egypt, Lebanon and Jordan, provides deals suitable for children through its Dubai Family services (which builds off the LivingSocial Families offerings), as well as travel-specific deals through GoNabit Getaways.
Today’s acquisitions by LivingSocial make it clear it is not backing down from competing against its biggest rival, Groupon, which has recently expanded abroad with a feverish pace. Both companies are buying scale as opposed to building up their services internally. Since May 2010, the two companies have made 22 acquisitions (LivingSocial: 9; Groupon: 13), 18 of which have been for deal sites outside of the U.S. The other acquisitions were either advertising or technology-related. While deal values for the majority of the recent acquisitions were not disclosed, its safe to assume that much of the cash they have received through venture rounds is going towards M&A – not R&D.
Even with recent criticism from the industry about the business practices of these deal sites (TechCrunch recently ran a month-long guest series describing business owner’s bad experiences with Groupon), there is still optimism about the future of the “deals” space. Internet retailer Amazon feels the deals space is still worth entering: Amazon invested $175 million in LivingSocial in December, and announced earlier this month it is using the service to source its own new deal site, AmazonLocal (although deals will eventually come directly from Amazon). And despite financial information showing Groupon has been running at a loss since the beginning of 2010, there is still interest in Groupon’s impending $750 million (minimum raise) IPO at a rumored $20-$30 billion valuation.