Image from: Amazon
Remember last year when group buying sites were all the rage? Consumers couldn’t get enough of them, analysts loved talking about them, and retailers feared them. Well, other than Groupon’s rocky IPO, we haven’t heard a lot about group buying sites recently. In fact, it seems like consumers are getting bored of them as well. Since peaking last summer, traffic to the two largest group buying sites has steadily fallen.
But despite all this, newcomer AmazonLocal is jumping into the game head first. AmazonLocal first started offering deals in a few select markets in June; since then, it has grown to attract over 1 million consumers each month. To really get consumer attention, last week, AmazonLocal offered a nationwide deal of a $10 Amazon gift card for $5. The deal skyrocketed AmazonLocal daily traffic to 3-times its typical rate. The Amazon deal was so popular that they sold 1 million gift cards in less than 17 hours and attracted tens of thousands of more subscribers.
This deal is reminiscent of the Amazon gift card promotion LivingSocial offered back in January 2011, shortly after a hefty invest by Amazon in the company. On January 19, 2011, LivingSocial offered a nationwide deal of a $20 Amazon gift card for $10. And as you can see, consumers jumped on it.
Most analysts say that the Amazon deal put LivingSocial on the map and helped propel it to Groupon size proportions. So why not do it again on its own group buying site, Amazon probably mused. And by all accounts, it seemed to have worked. Reports won’t stop buzzing about the deal, some calling it the “most successful in terms of deals sold as well as revenue generated.” So keep your eyes (and wallet) on AmazonLocal, this site is coming at you with guns blazing.
Debra Miller Arbesman is senior associate, retailer and consumer products at Compete, a Kantar Media company that helps brands improve their marketing based on the online behavior of millions of consumers.