LivingSocial’s Attention-Getting Amazon Offer

Discussion
Jan 20, 2011
George Anderson

The daily deal sites LivingSocial and Groupon, one getting
financial backing from Amazon.com and the other (presumably) setting itself
up for a major initial public offering, went after consumers and each other
hard yesterday.

Opening up our email at 9:29 a.m. EST, we were pleasantly surprised
to see an offer from LivingSocial that allowed us to purchase a $20 Amazon
gift card (almost like giving cash to a frequent Amazon user) for $10.

Turns
out we were not the only ones happy with the deal as more than a million people
had taken LivingSocial and Amazon up on the offer by Wednesday evening. TechCrunch said
LivingSocial was selling vouchers at a clip of 85 a minute. A piece on the Mashable site
as well as others estimated that over two million might eventually go for the
deal by 8:00 a.m. EST.

Interestingly (note we didn’t say surprisingly), an offer
from Groupon came in exactly 30 minutes later (9:59 EST). We and others were
informed, “It’s
time to get your Groupon!” What that meant was we could take an additional
$10 off our first Groupon purchased between now and Feb. 2.

Discussion Questions: What do you think the offers made yesterday by LivingSocial and Groupon will mean for their respective businesses?

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7 Comments on "LivingSocial’s Attention-Getting Amazon Offer"


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Max Goldberg
Guest
10 years 3 months ago

Living Social’s offer with Amazon makes sense. Groupon’s self-discount does not. The Living Social offer is like a discount to a merchant. Granted that this merchant offers a huge number of items for sale, but Amazon is a merchant nonetheless. Groupon is simply discounting itself. With 50 million users, one has to question the logic of that decision. Did investors recently pour money into Groupon so it could be given away?

There’s plenty of room for Living Social and Groupon to co-exist. They don’t have to waste money trying to knock each other out of the game.

Liz Crawford
Guest
10 years 3 months ago

I agree with Max–there is no reason these two can’t get along. A discount to Amazon means a wealth of product categories, all throughout the US. A discount to Groupon means a hyper local discount, usually at a single category supplier. So, these aren’t the same offers from a shopper perspective. Instead, it’s just more money! Whoppee!

Bob Phibbs
Guest
10 years 3 months ago

LivingSocial used Amazon to capture a lot of emails quickly. I wrote a blog about why here.

Paula Rosenblum
Guest
10 years 3 months ago

I’m curious why people think Groupon “ate” the cost of its discount itself. Have we never heard of Co-op advertising?

The deal of the day is a hot commodity. It’s also generally a loss leader. It’s not going away any time soon. Smart retailers will use it to drive traffic to their stores. It’s just another way to re-invent store relevancy in the 21st century. Driving people to Amazon is the exact opposite. Retailers need to pay attention to this data.

Joan Treistman
Guest
10 years 3 months ago

There’s an opportunity to better understand the users of Groupon and LivingSocial. If the organizations dig deep as to who took advantage of the offers and how they are using them, there’s more “gold in them there hills.”

Gene Detroyer
Guest
10 years 3 months ago

Max Goldberg, you are clear, concise and to the point. No one could have said it better. Perhaps, Groupon should have consulted you first.

Both Amazon and LivingSocial are big winners here. Big numbers, high profile, great publicity. I might even sign up for LivingSocial, hoping they do it again.

Bill Hanifin
Guest
10 years 3 months ago

The LivingSocial offer with Amazon has greater importance as it (to my knowledge) is the highest profile partner offer they have made. It is better compared with the Gap offer made by Groupon a few months ago.

Did Groupon panic and put out a poorly conceived response? If so, why? They are still the market leader and, as others have said, there is room for both to exist.

Groupon would have been better served to introduce another offer with a high profile national merchant as they did with Gap. The only consideration is that working with national retailers undermines the “local merchant” focus, a topic for another day.

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