LivingSocial Confirms $175 Million Amazon Investment
The rumors are true! Amazon and daily deals site LivingSocial have just officially confirmed their partnership, with the e-tailer investing a whopping $175 million in the latter. This comes at an interesting time for both companies …
Context & Ripple Effects
The confirmation lands one day after BoomTown reported Amazon was poised to invest in LivingSocial specifically to counter what it called the 'Groupoogle' threat — Groupon reportedly weighing its own suitors while holding the category lead. The pickup was broad: syndicated versions carried a Hitwise breakdown showing Groupon drawing 79% of U.S. group-buying visits against LivingSocial's 8%, framing exactly what the $175 million has to buy down.
For Amazon, the move comes at a crowded moment — the same coverage cycle has its Kindle seen ceding e-reader ground to Apple's iPad even as it pushes holiday gifting across 725,000 Kindle titles. Buying into the No. 2 daily-deals player extends Amazon's reach into local commerce rather than defending the device business directly.
First-order effects
- LivingSocial gets a $175 million war chest to attack an 8%-vs-79% traffic gap behind Groupon, converting its No. 2 position from a defensive fact into a funded challenge.
Second-order effects
- Groupon now faces a rival backed by Amazon's customer base and logistics reach rather than a standalone startup, raising the stakes in any negotiations it has with Google.
Third-order effects
- If platform-backed challengers become the pattern, group-buying consolidates around companies that own distribution — local-deal startups competing on their own would be squeezed between scaled incumbents.
The trend: Local group-buying is being absorbed into the strategic portfolios of large e-commerce platforms, with capital deployed to close traffic gaps rather than build new categories.