It was pretty much seen as a coup for LivingSocial in January 2011 when it ran a daily deal featuring a $20 Amazon.com gift card for $10. The offer generated unprecedented interest and many on RetailWire and elsewhere thought it would provide a lift for LivingSocial going forward.
While there is plenty to debate on the after effects of the deal for LivingSocial, Amazon appears to have been happy with the results and has decided to go the daily deal route again. The difference is that this time the company is keeping the business completely in-house with its own AmazonLocal service.
Amazon had made a $175 million investment in LivingSocial several weeks before running the promotion last year and currently owns about one-third of the company. This go-around, Amazon sold one million gift cards valued at $10 for $5. According to All Things Digital, it took Amazon all of 17 hours to do it. LivingSocial with a bigger daily deal subscriber base reached the million gift card mark at 14 hours.
"One of their challenges going forward will be to build their subscriber base for AmazonLocal, which explains why they ran this deal," Vinicius Vacanti, co-founder of Yipit, told Reuters. "Had they run this deal through LivingSocial, LivingSocial would have kept all of the subscribers."
In a blog post, Tim Elliot, co-founder of Savvr, wrote, "Analyzing Groupon's data and general industry trends, the price for a daily deal subscriber is around $5 per person. Amazon not only paid that amount but they also acquired substantially more valuable subscribers: Customers who are known to make purchases online and now these customers can place 1-click orders as well. These subscribers are substantially more valuable than a regular list subscription that may never materialize into a buying customer."