* AmazonLocal sells one million discounted Amazon.com gifts
* Amazon ran deal without strategic partner LivingSocial
* Amazon hedges its bets on LivingSocial-local commerce
By Alistair Barr
SAN FRANCISCO, March 21 Amazon.com Inc
ran a big daily deal this week without its strategic partner
LivingSocial, suggesting the world's largest Internet retailer
is serious about building its own business in this fast-growing
AmazonLocal offered a $10 Amazon.com gift card for $5 on
Tuesday and sold one million vouchers before capping the deal
the same evening, according to the unit's website.
In January 2011, LivingSocial ran a similar deal, offering a
$20 Amazon.com gift card for $10. The company sold 1.4 million
vouchers and gained lots of new subscribers, helping it keep up
with bigger rival Groupon Inc.
The LivingSocial deal came a few weeks after Amazon invested
$175 million in LivingSocial.
However, in June Amazon launched its own daily deal
Most of AmazonLocal's offers were created by LivingSocial's
sales force at first. But AmazonLocal has hired its own sales
staff in some markets and has been running more of its own deals
From the fourth quarter of 2011 through the early part of
this quarter, fewer of the merchants featured on AmazonLocal had
previously run deals with LivingSocial, according to Yipit,
which tracks the industry.
AmazonLocal's offer of a discounted Amazon.com gift card
this week will help the daily deal unit quickly sign up lots of
its own new subscribers.
"One of their challenges going forward will be to build
their subscriber base for AmazonLocal which explains why they
ran this deal," said Vinicius Vacanti, co-founder of Yipit. "Had
they run this deal through LivingSocial, LivingSocial would have
kept all of the subscribers."
Vacanti and others said the move suggests Amazon is hedging
its LivingSocial investment.
"Amazon owns about a third of LivingSocial, but it is
clearly hedging its bets by developing AmazonLocal," said Peter
Krasilovsky, a vice president and program director at
BIA/Kelsey, which tracks daily deals and the broader local ad
market. "If it doesn't end up buying all of LivingSocial, which
would be very expensive to do, it will have a deals platform in
Amazon spokeswoman Michele Glisson said the company has a
"strategic relationship" with LivingSocial to provide local
deals for customers across the country, while AmazonLocal's
sales force is focused on providing national deals and deals in
"select local markets."
She also said AmazonLocal plans to offer more deals from
Amazon-affiliated websites in the future.
A LivingSocial spokesman said the company welcomes deals
like the one AmazonLocal ran on Tuesday and noted that
LivingSocial is the "primary provider" of deals for AmazonLocal.
Offers like Tuesday's "help increase member sign-up and
brand awareness and that ultimately means good news for both our
companies," the spokesman added.
Still, Boyan Josic, head of Daily Deal Media, which covers
the daily deal sector, said Tuesday's offer makes it clear that
Amazon views AmazonLocal as its main daily deal platform.
"How this affects their investment into LivingSocial isn't
very clear to us at this point," Josic said.