Starbucks STEAMING New Deal

By 11 p.m. EST Wednesday, LivingSocial’s (NASDAQ:AMZN) daily deal, a 50 percent discounted $10 Starbucks virtual gift card, had sold one and half million units, making it the best-selling daily deal of all time, according to daily deal aggregator Yipit.

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Not only had the startup sold one and half million Starbucks gift cards, but LivingSocial had sold out.  The deal was a success for the company, who estimated selling only one million.

This was the first time Starbucks (NASDAQ:SBUX) offered a deal through Groupon (NASDAQ:GRPN), although the company ran a similar deal with Google Offers, a daily deal business owned by Google (NASDAQ:GOOG).

A 50 percent discounted $20 Amazon gift card offered in January 2011 previously held the record for best-selling daily deal, selling 1.16 million. Living Social, partly owned by Amazon, was similarly successful with Whole Foods and Fandango movie ticket deals.

Despite its successes, LivingSocial faces a competitive market that includes the largest deal-of-the-day company Groupon. According to Harvard Business Review, Groupon’s best-selling coupon offering “$25 for $50 worth of shoes, apparel, and more at Nordstrom Rack” sold 623,000 back in 2010.

Competition is not the only concern for daily-deal companies.  Shares of Groupon, which unlike LivingSocial is a publicly traded company, have dropped since its IPO last year, casting doubt about the viability of the daily deal business.  The stock hit a record low of $4 yesterday, after having missed second-quarter revenue projections.

But by offering consumers a deal through daily-deal company LivingSocial, Starbucks’ gave Groupon’s main rival a vote of confidence. Starbucks’ chief digital officer Adam Brotman said the company’s decision to work with LivingSocial proves that daily deals work for some merchants.

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