March 20, 2012, 11:17 AM

Amazon’s daily deal arm sells Amazon.com gift cards for half off

Amazon hopes to gain ground on Groupon and other discount providers.

Zak Stambor

Managing Editor

Lead Photo

AmazonLocal, the daily deal offering from Amazon.com Inc., is making its biggest push yet into a market dominated by Groupon Inc. and LivingSocial by offering $10 Amazon.com gift cards for $5.

By 8:11 p.m. Eastern time Amazon had sold all of its 1 million available vouchers.

The deal is the first time the retailer has offered gift cards for Amazon.com. It previously has sold vouchers for other Amazon properties such as Diapers.com.

The offer, available only today, mirrors a deal that LivingSocial ran in January 2011. Then, the Groupon rival offered a $20 Amazon gift card for $10. The daily deal operator sold more than 1.3 million vouchers, which made it the most-purchased daily deal offer yet.

Amazon ran the offer with LivingSocial because the e-retailer, No. 1 in the Internet Retailer Top 500 Guide, owns a 31% stake in the daily deal operator. But now Amazon appears ready to bolster the profile of AmazonLocal, which launched last June and is available in about 90 markets throughout the United States.

AmazonLocal, which generated nearly $20 million in revenue in the fourth quarter, is the fourth-largest daily deal operator behind Groupon, LivingSocial and Travelzoo, according to data compiled by daily-deal aggregator Yipit. While its sales remain far behind market leader Groupon, which generated $506.5 million in sales in the fourth quarter, it is growing rapidly, according to Yipit.

Amazon says that AmazonLocal's advantage is its large customer base. "Millions of customers are familiar with Amazon.com and its affiliates, and they trust us to provide the right products, at the right time and for the right price," says an Amazon spokeswoman. "Customers know that we will put them in touch with only the most respected and reputable businesses that are able to provide unmatched value. Merchants know that Amazon provides built-in access to a large customer base, making AmazonLocal an efficient marketing channel that can drive new and repeat customers to their businesses."

One way Amazon is carving out a unique niche from the competition by presenting offers to consumers using Kindle with Special Offers—the cheaper versions of the retailer’s e-readers that require shoppers to view sponsored screensavers and discount offers from other brands. Shoppers can buy the daily deal offers directly from their Kindles; purchases are followed by the receipt of the voucher on the Kindle’s home screen. Customers show the vouchers to participating merchants and service providers. Customers also can print the vouchers.

Amazon’s offer today comes less than a week after Google Inc. expanded its Google Offers daily deal service into four new markets—Houston, Philadelphia, Miami and Austin—and began aggregating deals from 11 more daily deal operators beyond the sites it already drew offers from, such as Gilt City, KGBdeals, and Plum District.

The IRCE $200 early-bird discount expires Mar. 31.

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