Wednesday, March 21, 2012

AmazonLocal 50 percent off gift card deal sells out with 1 million sold's nascent AmazonLocal daily deals service scored its biggest hit thus far on Tuesday: one million Amazon gift cards sold for $5 million. Naturally it was a big winner: the company was selling the gift cards for 50 percent off, $10 cards for $5.

It was similar to the response given to a Living Social deal in January of last year. Then, Living Social, perhaps Groupon's biggest rival, sold 1,301,296 gift cards with the exact same 50 percent off a $10 gift card deal.

In a statement, an spokesperson confirmed the deal sold out after one million orders:

“The $10 Gift Card deal offered by AmazonLocal on Tuesday sold out in just over 17 hours at 5:11 p.m. PDT. The deal went live at midnight PDT and was available to customers across the U.S. The popularity of this AmazonLocal deal shows that customers want unique and relevant deals that provide them with an excellent buying experience.”

Actually, since the response was similar to the Living Social deal, it shows more that customers want 50 percent off deals.

Savvr, which tracks deal information from 260 publishers, said the following:

"This deal was designed to grow their subscriber base. Analyzing Groupon’s data and general industry trends, the price for a daily deal subscriber is around $5 per person. Amazon not only paid that amount but they also acquired substantially more valuable subscribers: Customers who are known to make purchases online and now these customers can place 1-click orders as well. These subscribers are substantially more valuable than a regular list subscription that may never materialize into a buying customer."

What Savvr means is that although "lost" $5 per gift card voucher, it was basically acquiring daily deal subacribers so they didn't really lose anything. We're not sure we agree with that analysis. After all, a fair number, if not the majority, of those who bought into the deal were already subscribers and learned of the deal via their daily email from AmazonLocal (we did).

They also didn't necessary gain new customers either.

On the other hand, those gift cards will havee to be used at, and since it's likely the customers will spend more than the $10 anyway, it's not that costly for, either way. launched AmazonLocal last June. It currently offers the service in dozens of markets across the United States. Most deals are localized, but this one was national.

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