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How LivingSocial 'Instantly' Took NYC's 3rd Ave

  |  June 9, 2011   |  Comments

iPads and 100 percent takes for merchants helped.

lsdSix Manhattan merchants between 27th and 31st Streets on 3rd Avenue participated in LivingSocial's $1 offers yesterday as it premiered "Instant Deals" in New York City. Speaking with ClickZ News, two pizzerias, one gelato shop, a pita grill, a bar & grill, and a yogurt storefront all had the same story to tell: they saw new patrons come through the door.

Naef Qassis, owner of Van Diemens, offered a burger, fries, and a beer for $1. His bar & grill capped the number of possible vouchers to 80 and sold 66.

"Sixty-six new faces," he said. "It was what we wanted to see."

Chris Powell, manager of Berrywild, said her yogurt store's $9-for-$1 offers were capped at 200. But those quickly sold out, and LivingSocial asked to up the cap to 300. By 2 p.m., that allotment was gone.

"We wanted to expose our name to people in the neighborhood," Powell said. "We wanted to get people who were doing their lunchtime thing. A lot of people who live in this neighborhood come into our store, but at night. So we want more of a lunchtime crowd. And we had a lot of people come in."

Washington, DC-based LivingSocial ran a similar campaign last month in its hometown, selling 27,000 deals in a day. Its New York City debut included more than 100 merchants and around 16,000 vouchers sold.

Perhaps what's most interesting is how LivingSocial got the merchants on board. It offered them complimentary iPads so they could enter redemption codes into an app. And as long as they continue to run Instant Deals, they get to hold onto the iPad. What's more, they also get to keep all of the money from yesterday. As part of the promotion, LivingSocial didn't pull from any of the cut but will take around 25 to 35 percent from future deals, the merchants said, starting today.

Eva Perez is manager of Pita Grill, which offered $10 worth of food for $1 and capped the number of vouchers at 200. The allotment sold out. All told, her 3rd Ave. eatery made $2,000 in a few hours off the promotion.

"We normally get a lot of delivery and pickup orders," Perez explained. "So our goal was to bring people into the store. We saw a lot of new customers."

Billy Skasilas, owner of La Pizzeria, was offering $5-for-$1 in pizza. Customers redeemed more than 30 of the 40 vouchers he had slotted for sale. "It was good," he said, while sitting in his classic New York pizza shop. "People were coming in from their offices, I think. We definitely got some new customers."

While offers were available for multiple Manhattan neighborhoods, LivingSocial spokesperson Maire Griffin said her company targeted busy-but-residential areas like the Murray Hill section in which these merchants operate. "We wanted to focus on people who were living and working in New York," she said.

Izhar Cohen, CEO of Mia Chef Gelateria, said his six-week-old business, which sells gelato made from original recipes, had the same intentions as Berrywild in terms of wanting to draw a lunchtime crowd. He said LivingSocial's sales team approached him during the last few weeks about doing a $1 offer.

"The main reason I did it was to bring in new customers," Cohen said. "We saw a lot of people from the area who before today didn't know we existed."

Each merchant plans to run Instant Deals via LivingSocial going forward. Consumers can buy the deals online or via LivingSocial's iPhone/Android app. Purchasers redeem the offers by showing the shop a virtual voucher on a smart phone or a regular cell phone in the form of a text message. The merchant can enter the offer code into the iPad app or look up the customer's name via the app and record the redemption.

livingsocialballoonsSimilar to Instant Deals, competitor Groupon's GrouponNow product recently launched in Chicago, New York, and San Francisco. Both deals players plan to take their mobile initiatives national as soon as possible.

For now, it appears LivingSocial may have the upper hand on Groupon with merchants in Manhattan, or at least in Murray Hill. When asked, none of the interviewed businesses said they had run a "Groupon" before. And on 3rd Ave. yesterday bouquets of balloons (pictured) were placed on the sidewalk outside of the participating shops; they were colored blue, red, orange, and yellow and showcased the LivingSocial brand name.

Mark Greenspan, owner/partner for Rev'd Up Pi, said he's offering two pizza slices and a drink for $6 Monday through Friday for the rest of this week and next week. That meal would normally cost $10. In addition, Greenspan will be running a large, one-topping pizza deal for $16 (regularly priced at $24).

What did he see on Wednesday when offering two slices of pizza and a soda for $1?

"Nice long lines," Greenspan said.

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Christopher Heine

Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.

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