Starbucks Gives a Potent Caffeine Jolt to the Daily Deals Business
Daily-deals website LivingSocial offered $10 Starbucks (SBUX) gift certificates for just $5 on Wednesday, and sold out of all 1.5 million vouchers before the day was through. Whether it's a testament to the allure of Starbucks or a sign that group-buying websites are alive and well despite Groupon's (GRPN) free-falling stock, the result will still probably be java-hungry patrons waving their eGift vouchers ahead of you at your local Starbucks.
Work the math.
There are nearly 13,000 Starbucks stores in this country. The average store will wind up processing more than 110 of these if they're all redeemed.
Sure, a lot of people will forget to claim the vouchers. Buyers also have six months to redeem the $10 in Starbucks drinks and grub. However, human nature with these prepaid deals is to use them sooner rather than later.
Be ready, brave baristas.
That's a Latte Discounts
The daily-deals industry needed this. It's been two years since Groupon turned heads by selling 441,000 $50 Gap (GPS) vouchers for $25. Wednesday's 1.5 million deals claimed tops the 1.3 million $10 Amazon.com (AMZN) gift cards sold by LivingSocial early last year.
With all of the negative publicity that Groupon was generating as an investment, it was getting easy to forget that these flash-sale websites can still draw big crowds when the merchant and value are too magnetic to ignore.
A year ago, investors were waiting anxiously for the Groupon IPO. The chatter had LivingSocial going public shortly after that.
However, Groupon's horrendous performance since going public at $20 back in December dried up any chance of LivingSocial following suit.
The good news is that Groupon has been profitable in back-to-back quarters to kick off 2012. Growth is slowing -- and there are some worrisome sequential trends -- but the market's treating the stock as if it's going to zero.
Despite LivingSocial's validation of the niche that Groupon continues to lead, the stock closed at $4.18 on Wednesday, 79% below its IPO price set just nine months ago.
Maybe the 1.5 million vouchers sold, while possibly inconveniencing you the next time that you're at Starbucks for a cappuccino, will be just the caffeinated kick that the daily-deals niche needs.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks. The Motley Fool owns shares of Amazon.com and Starbucks. Motley Fool newsletter services have recommended buying shares of Starbucks and Amazon.com. Motley Fool newsletter services have recommended writing covered calls on Starbucks.