GROUPON & LIVING SOCIAL CAUGHT INFLATING PRICES TO SHOW BIGGER DISCOUNT

Groupon and LivingSocial succeed because consumers perceive them as great deals. But is that true?

Thumbtack.com called 10 vendors offering daily deals (five from Groupon and five from LivingSocial) and found eight instances where they were quoted a price over the phone that was cheaper than the advertised regular price being offered. All five of Groupon's prices were higher than the same merchant's price when called, and three of the LivingSocial ones were.

Some of the most egregious examples from the Thumbtack.com post:

• On August 24, 2011, Groupon offered carpet cleaning for a 200 sq. ft. room in San Francisco for $45, a discount of 78% from the regular price of $200. The price we were quoted? $160 for 300 sq. ft. of carpet cleaning, or $0.53 per sq. ft. At $0.53 per sq. ft., the cleaning for a 200 sq. ft room would cost $106.
• On September 19, 2011, Groupon offered two hours of home cleaning services in Phoenix for $49, a discount of 67% from the regular price of $150.  The non-discounted price for the cleaning advertised by Groupon? $150. The price we were quoted for two hours of home cleaning? $80.

MICROSOFT LAUNCHES BING DEALS

Microsoft announced and launched a new deals website on Friday tied to its growing Bing suite of services. Bing Deals is a shopping site that compiles specials from GroupOn, Target, LivingSocial, Nordstrom and others. “Instead of building another program, we’re harnessing deals from major providers and retailers,” said Bing senior director Lisa Gurry. Microsoft’s Bing Deals offers more than 200,000 specials across the United States and, as a deal aggregator, it should eliminate the need to sign up for email alerts from multiple coupon-based services. Just like competing options, Microsoft will offer daily specials that will be accessible from its desktop website located at http://bing.com/deals and from mobile devices.

FACEBOOK SHELVES "FACEBOOK DEALS"

Facebook has decided to shelve its Facebook Deals product, a service that was launched to compete with other coupon service providers such as Groupon and LivingSocial. “After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks,” Facebook told Reuters. “We think there is a lot of power in a social approach to driving people into local businesses. We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.” Facebook will instead focus on Pages, Sponsored Stories and its Ads product. Facebook announced Deals in November and began testing the service in Atlanta, Austin, Dallas, San Diego and San Francisco. It partnered with aDealio, Gilt City, HomeRun, kgb deals, OpenTable, Plum District, PopSugar City, ReachLocal, Tippr, viagogo and zozi to power the service.