While Groupon is practically a household name at this point, we learned today that other group buying sites are not content to sit in the background.
LivingSocial, a group buying site with national reach, today launched an unprecedented deal. It’s not the discount that was amazing, it was the place: Amazon.com.
As of 4:45pm ET, over 823,000 people had purchased the deal, which was $10 for a $20 Amazon.com gift card. Buyers were limited to one gift card each. The deal has certainly given LivingSocial significant publicity and put Groupon on notice: there are two big group buying site now.
What’s really interesting about this deal is is the fine print: “Amazon.com is not a sponsor of this promotion.” LivingSocial purchased these gift cards directly from Amazon.com, and is now selling them on their own. Clair Cain Miller at the New York Times has more details:
LivingSocial’s Amazon discount has an unusual wrinkle. Unlike with other deals, LivingSocial might be losing money selling the Amazon coupons.
Typically, retailers sell the coupons directly to consumers for the discounted price, and LivingSocial takes a cut, generally 30 percent. But for this deal, LivingSocial bought the gift cards from Amazon and is selling them itself.
LivingSocial declined to say how much it paid Amazon for the gift cards. Amazon also said it would not disclose the terms of the deal.
If LivingSocial paid Amazon $20, then LivingSocial is absorbing the losses. If it paid Amazon less, then Amazon is losing money.
It should also be noted that Amazon.com recently invested $175 million in LivingSocial.