Amazon's Gift Card Promotion Nets $5 Million and Lots of New Subscribers
In just 17 hours yesterday, AmazonLocal sold one million Amazon gift cards for $5 million, making it the company's most successful promotion in the daily deals space to date. — That's not a big surprise …
Context & Ripple Effects
The playbook here has a direct precedent inside the corpus: in January 2011, LivingSocial's million-card Amazon gift card promotion generated $20 million in card value — a deal run by the company Amazon backed, not Amazon itself. Fourteen months later Amazon is running its own version through AmazonLocal, and the economics look different: one million cards for $5 million means Amazon paid roughly $5 per card to put its brand and storefront in front of each buyer.
Timing matters too. The promotion landed two days after Amazon confirmed its $775 million cash acquisition of Kiva Systems, part of a stretch where the company was spending simultaneously on warehouse robotics (supply side) and on a subscriber-generating local-deals promotion (demand side). Syndication across CNET, GeekWire, Examiner and Savvr shows the story traveled widely as a marker of how far Amazon had pushed into Groupon-and-LivingSocial territory.
First-order effects
- AmazonLocal gets what the article calls its most successful daily-deal promotion to date — one million new customer touchpoints bought at $5 million, or about five dollars per acquired relationship, in 17 hours.
- Groupon and LivingSocial, the established daily-deal leaders, now compete directly against a rival whose gift card doubles as an on-ramp to Amazon's broader retail catalog rather than a standalone merchant voucher.
Second-order effects
- Daily-deal operators' core asset — the local-subscriber email list — loses exclusivity as Amazon demonstrates it can manufacture equivalent volume on demand, pressuring the valuation logic of the deals category.
- Merchants featured on deal platforms gain leverage: if Amazon can drive comparable traffic through its own promotions, local businesses can shop between platforms on terms rather than accept the standard revenue split.
Third-order effects
- If the pattern holds, daily deals stop being a stand-alone industry and become a customer-acquisition channel that scaled commerce platforms run at a deliberate loss — the same structural threat Groupon's IPO-year critics flagged, now demonstrated by the largest player.
- Subscriber counts, not deal margins, emerge as the metric platforms optimize; Amazon's willingness to spend $5 million in a day signals that lifetime retail value, not promotional revenue, is the unit of account.
The trend: Daily deals are being absorbed into big-commerce customer acquisition, with platforms like Amazon using discounted gift cards as cheap subscriber funnels rather than profit centers.