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Living Social Challenging Groupon

Living Social Challenging Groupon - LivingSocial, the second-biggest website for daily deals, is planning to use a $183 million investment from Amazon.com to overtake market leader Groupon Inc. At almost the same time, Groupon turned down a $6 billion buyout offer from Google.

LivingSocial and Amazon are apparently preparing to combine their websites in significant ways. But one reason why Amazon has not bought the smaller company outright is the matter of state sales tax. As things stand, Amazon collects no sales tax for most of the states in the U.S. Vendors are required by law to collect sales tax only for states where they have a physical presence. Theoretically, when a customer orders from Amazon, the customer should report and turn the sales tax in himself, but that rarely if ever happens.

Living Social Challenging Groupon

But LivingSocial’s type of business depends on an enormous sales team, physically located in every market in which it operates. If Amazon bought LivingSocial, that sales force would become Amazon employees, Amazon would gain a physical presence across the nation, and become liable for sales tax in all those additional states.

Living Social and Groupon both offer their members coupons for their local businesses via daily emails, which they buy online. These coupons offer big savings, at times up to 75% off. Local businesses who have participated in group-coupons have discovered that, if the merchant provides a good product and good service, he may win a customer who keeps coming back, long after the special deal is over. Some estimates of success with coupon sites are as high as 95%

Living Social Challenging Groupon

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