Visitors to AmazonLocal on Tuesday, March 20, will have the opportunity to buy $10 gift cards for $5. The company will not disclose how many cards they are selling, saying that the cards are available in a “limited quantity.”
LivingSocial (News - Alert) is partly owned by Amazon, but AmazonLocal is the company’s official answer to Groupon and other group deal sites. The gift card opportunity is designed to lure customers into checking out Amazon’s daily deals from restaurants, spas and other local businesses. Amazon tried a similar deal with LivingSocial, offering 1.4 million $20 for $10 gift cards last year in an effort to draw customers to its subsidiary site.
“They sold 1,157,141 units, grossing more than $11 million dollars, in one of the most successful daily deals of all time,” says Jim Moran, co-founder and president of Yipit, a site that aggregates deals and compiles research on the daily deal industry.
According to Time magazine, AmazonLocal generated $20 million in revenue during Q4 of 2011. However, Groupon did over $500 million in sales, meaning that Amazon has a long way to go in order to catch up. The marketplace for local deals sites is crowded and fiercely competitive, with over one-third of the businesses disappearing in 2011 alone.
So far, AmazonLocal has opened in 90 cities. In addition, the company is leveraging its Kindle eBook reader to promote daily deals. “Say you take a break from reading a book on your Kindle and it goes into sleep mode,” says Mike George, AmazonLocal vice president. “That day’s deal will pop up as a screen saver. These will be beautiful images too, we promise.”
To make itself competitive, Amazon is developing offerings that distinguish it from other daily deal sites. In addition to promoting offers from local spas and restaurants, AmazonLocal sometimes promotes discounted healthcare offerings for the uninsured, a move that Groupon has also made. Last month, Amazon acquired TeachStreet, an online tool that pairs students with teachers and tutor, to add to the AmazonLocal dossier.
AmazonLocal came onto the scene last August, and time will tell if customers will bite in significant numbers after high profile failures such as Facebook Deals. Until then, visitors can enjoy their half-price gift cards. Amazon’s loss will be their gain.
Edited by Jennifer Russell