By Rieva Lesonsky

Iphoto shoppers love a bargain so today’s hot trend makes perfect sense to me: DigitalBeat reports that “group buying” is one of today’s hottest new business ideas.

Group buying capitalizes on two trends that are incredibly popular right now: saving money and social networking. Here’s how it works for one company, LivingSocial, that just raised $25 million in venture capital for its group buying service: Local businesses offer a deal that’s valid only if a certain number of people sign up. The businesses post the deals on Facebook, where users urge their friends to get in on it so they can get the deal. LivingSocial gets part of the sales generated to the small business.

Other competitors in this arena include Groupon, Cherry Deals, SocialBuy and Scoop St. There’s even a search engine for group deals, Yipit.

DigitalBeat theorizes that there’s still lots of room for niche competitors: “Think Groupon for moms or LivingSocial for athletes.” But there’s also a risk: If a competitor develops a solution that’s self-serve, where local businesses can sign up automatically (rather than negotiating the offer with a salesperson), that competitor would leap ahead of the pack.

Have you used a service like this to offer deals for your customers? How did it work for you?