AmazonLocal taps YP's abundant sales force to compete with Groupon

SAN FRANCISCO Thu Aug 16, 2012 2:47pm EDT

A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008. REUTERS/Rick Wilking

A box from Amazon.com is pictured on the porch of a house in Golden, Colorado July 23, 2008.

Credit: Reuters/Rick Wilking

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SAN FRANCISCO (Reuters) - Amazon.com Inc's daily deal business, AmazonLocal, is running more offers arranged by local advertising giant YP.com, helping the world's largest Internet retailer better compete with Groupon Inc.

The move helps AmazonLocal extend more deals without Amazon having to expand its own sales force, which would be costly.

Groupon, the world's largest daily deals company, has thousands of employees calling on local merchants every day to persuade them to offer big discounts to online shoppers. That human-heavy focus has turned off some technology investors because a business that needs a lot of workers can be harder to grow profitably.

"Amazon has been experimenting with a local sales force, but sourcing local deals is the hardest part of the equation - actually calling local merchants and finding deals on a daily basis that are interesting enough for people to buy," said Peter Krasilovsky, a vice president at BIA/Kelsey, which analyzes local media and advertising.

"AmazonLocal has to be interesting every day," he added. "This goes for the whole industry."

A spokesman at YP.com confirmed the relationship with AmazonLocal, but declined to comment further. YP.com is owned by private-equity firm Cerberus Capital Management and AT&T Inc.

In October, Google Inc's daily deals business, Google Offers, started running deals arranged by at least 15 other daily deal sites, including Gilt City, kgbdeals, TIPPR, Plum District and Juice in the City.

YP.com - which used to be known for its yellow pages business - has had thousands of salespeople focused on local merchants for many years, Krasilovsky said. The company started its own daily deals business last year, but compared with Groupon's more than 50 percent grip on the market, YP's industry share is just 1 to 2 percent, according to Yipit, which tracks the daily deal sector.

"It makes sense that they would be seeking wider distribution through Amazon," Krasilovsky said.

DEALS APLENTY

For example, AmazonLocal recently offered a $20 voucher for an Indian restaurant in Los Angeles for $10, a deal that was arranged by YP.com.

Other recent YP.com deals offered by AmazonLocal include 46 percent off soccer tickets in Dallas; 53 percent off Laser Tag games in Atlanta; 61 percent off a massage in Indianapolis; and a 60 percent discount on sunglasses in Beverly Hills.

"A lot of the AmazonLocal deals are (arranged) by YP.com now," said Unaiz Kabani of Yipit. "It's not clear exactly when this started, but it's been happening for a few months."

AmazonLocal has its own sales force tracking down deals in some markets, but it also sources deals through "strategic relationships" with LivingSocial, YP.com and other deal providers, an Amazon spokeswoman said.

AmazonLocal has taken that approach since it started in 2011, however, YP.com was not on board at the start, the spokeswoman added.

AmazonLocal has been sourcing deals from LivingSocial for longer. Amazon owns almost one-third of LivingSocial, Groupon's closest competitor.

(Reporting By Alistair Barr; Editing by Maureen Bavdek)

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