Amazon Ditches the Daily Deals Game
On Friday, the popular e-commerce site announced it would stop selling deals through Amazon Local, online and its mobile app, starting December 18.
Reporter, Inc.@ZoeLaHenry
The popular e-commerce giant Amazon has expanded its reach across a number of sectors -- including its most recent "Handmade" marketplace, an Etsy-esque portal for artisanal products.
On Friday, the company informed customers that it will be discontinuing its daily deals service, both online and on its app. Users who'd previously made a purchase through Amazon Local would not lose those products, and can still get discounted items through December 18.
"We've learned a great deal from the daily deals business and will look for ways to apply these lessons in the future as we continue to innovate on behalf of our customers and merchants," an Amazon spokesperson said.
The news comes just weeks after the company discontinued Amazon Destinations, an ill-fated hotel bookings service that launched earlier this year in April. In the past year alone, Amazon has also pulled the plug on Amazon Webstore, where small business owners could create their own online storefronts, as well as on Amazon WebPay, a peer-to-peer payments platform.
Just yesterday, its on-demand courier service, Amazon Prime, landed the retailer with a lawsuit, alleging that some delivery workers in California were receiving less than the $9 minimum wage.
Amazon Local, which first launched in 2011 in Boise, Id., aggregates deals from third-party sites like LivingSocial, connecting users to discounted items and events in their area. Amazon had invested $175 million in LivingSocial.
It's not surprising that Amazon decided to play the appealing daily deals game. In 2014, the deals market accounted for $3.2 billion in spending, up by more than 147 percent since 2009, according to the market research firm IBIS World. Amazon's major competitor has been Groupon, which currently captures the biggest market share (52 percent).
Although Amazon declined to comment on why it's putting the brakes on Amazon Local, it's fair to assume that customers have been growing increasingly weary of daily deals.Still, expanding into the deals business is tricky. The cost of local advertising and taxes can be massive. LivingSocial announced this month that it would lay off 20 percent of its staff. In September, Groupon announced that, in closing some of its foreign markets, it would lay off over one thousand employees.
Just months after launching the service, it was reported that the e-commerce had automatically removed some of its users from the daily email listserv. "Amazon customers trust us to provide relevant communication about our products and services, and recently, some customers were automatically unsubscribed from Amazon Local emails due to inactivity," a company spokesperson told VentureBeat.
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