What is Amazon Local?

» Posted by on Mar 22, 2012 in Business Strategy, Marketing | 2 comments

What is Amazon Local?

What is Amazon Local?  The New Daily Deal

This morning as I checked out the Alexa rankings, I noticed that once again Amazon Local is right up there.  What’s not on the list?  Groupon, Living Social, or any of the other much loved daily deal sites.  Interesting.

What is Amazon Local?

Amazon Local is a daily deal site that at first glance looks just like the others.  Launched with 14 markets about 9 months ago, it has expanded some, although doesn’t have full coverage over the US.  When you enter the site you have the option of entering your zip code or choosing your region from a drop-down list.  (Note to Amazon – I wanted to tell my readers what today’s deal was, but just choosing my region crashed Internet Explorer.  Twice.  Apparently the price of fame is bandwidth.)   Choosing your region brings you the daily deal – a coupon for ice cream, or a restaurant, or a spa – the usual retail offerings.

But, this article on Amazon Local from Business Insider  points out what’s under the covers.  Amazon Local isn’t a deal generator, it’s an aggregator, much like The Dealmap, now officially Google Offers, which we wrote about earlier (see Google Takes a Shot at Groupon.)   Amazon Local apparently “aggregates” currently from only one source – Living Social – but it’s not a big jump once the technology is in place to bring other deal companies on line.

Amazon is reportedly one of Living Social’s biggest investors.  So this weird business cannibalism makes some sense.   Living Social is being compensated, presumably, on each deal;  and Amazon can use its huge market presence to market the service and draw people in.  Once it has the client, it offers deal sweeteners  – discounts in combination with other Amazon offerings – that other deal sites working independently can’t match.  A significant advantage.

There is some evidence that participating in daily deal sites is not necessarily a great investment for businesses.  Some businesses have realized that it’s difficult to build a loyal customer base that will pay retail for your service the next time, when you start with a consumer who is focused on finding a huge discount on a daily basis.  However, those business owners who are succeeding in the stickiness factor might want to think about adding Amazon’s giant – and loyal – customer base to their team.

Google vs. Amazon?

As we found last year when Groupon turned down Google’s purchase offer and The Dealmap stepped in to capitalize on the rebound,  daily deals are apparently where all the cool kids need to hang out now, and Amazon has taken its place.  While Groupon still has the advantage of being first and having great name recognition (“it’s like Groupon” is still the best way to describe these things) it will have to battle to hold it’s spot with the big boys. We look forward to watching the battle of the titans…but according to the Alexa rankings, Google may need to learn some new moves.

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2 Comments

  1. Hi thanks for posting this. I’ve been trying to find more information on Amazon Local ever since someone in Amazon US phoned me to offer the Local Service. I run an online writing school, based in Edinburgh, Scotland. To be honest the woman trying to get me hooked made little sense and the deal was so complicated I couldn’t follow half of it. But If I understood correctly, and it is a big if, for the privilege of having my courses flashed up on the appropriate local page (although being online the whole world is local for us – sweetly, the dear lady thought Edinburgh was in London. Hem!) Amazon said we had to offer our courses at 50% discount and then they would take 25% of our income for the privilege of working with them. What business in its right mind would do that deal – even if it did get access to Amazon’s giant loyal customer base? There is a heavy price to pay for all the daily deals and not just financially. These titans are parasites, making money on the backs of real businesses and sucking them dry or squeezing them out the nest. Are we all too greedy and lazy too care? Probably. It’ll end in tears – it already is. So, it is rather an understatement when you say:
    “There is some evidence that participating in daily deal sites is not necessarily a great investment for businesses.”
    Cheers!

    • Thank you for the feedback, that is very interesting. I knew you had to discount by at least 50%, but did not know the percentage fee they were asking; 25% seems ludicrous. I really think that these sites don’t make sense for most businesses – most subscribers will make use of that heavily discounted event but never come back to pay full price. It is too big an investment for not much payback!
      And who wants to do business with someone who thinks Scotland and England are the same place? 🙂
      If you were interested at all in online advertising, in our humble opinion, Google or Facebook ad programs make a lot more sense. Not a large investment so you can experiment and see what works and what doesn’t. That said, we have recently found that Facebook is now pursuing us with phone calls, which is decidedly annoying!

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