Will Amazon, Google, and AOL Kill Groupon?

The dot-com bigwigs are flexing their daily-deal muscles.

Rick Munarriz
Rick Munarriz
Aug 2, 2011 at 12:00AM
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If you thought Amazon.com's (Nasdaq: AMZN) play on flash sales was limited to its sizable investments in LivingSocial, think again. The leading online retailer quietly launched AmazonLocal in Boise, Idaho, back in June, offering Groupon-style discounts for local restaurant, spa, and touristy outings. It rolled into Groupon's homestead of Chicago a few weeks later.

Amazon is leaning on LivingSocial to carry out these deals, but a spokeswoman told The Chicago Tribune last week that Amazon's plan is to ultimately source these deals with its own sales team. And why not? Groupon is set to go public at a mind-boggling valuation, Amazon already reaches a huge audience, and one can argue that it was here before "being here" was even cool. It acquired daily deal pioneer Woot.com last summer, just as sites offering short-lived bargains were starting to take off.

Amazon is also in the unique position that it can begin promoting AmazonLocal deals through Kindles that support marketing promotions. Oh, and there's also the plastic pitch. Amazon offers a reward-based credit card through JPMorgan Chase (NYSE: JPM), and it plans to offer bonus points when its branded credit card is used on AmazonLocal purchases.

In other words, Amazon has the infrastructure in place to go where Groupon and LivingSocial cannot.

The same can be said about Google (Nasaq: GOOG). The search giant began offering prepaid vouchers in Portland, Ore., in June, and it has gone on to roll out Google Offers in New York City and San Francisco. Google is the global leader in generating online leads. Why wouldn't it be all over this niche?

Even AOL (NYSE: AOL) got its feet wet by repositioning its Wow.com domain as a Groupon clone. It recently shut down, but AOL has even more ambitious plans to launch hyperlocal deals through its newsy Patch.com site.

The big boys aren't just waiting to let their organic efforts bear fruit. Google just acquired The Dealmap, and local-lead generator Local.com (Nasdaq: LOCM) announced last month that it will buy the company behind Screamin' Daily Deals.

Is this market getting so crowded that a shakeout is about to happen, or is there room for several titans? The next few months will tell us, but Groupon may be paying the price for its lucrative yet easy-to-emulate model.

Will you be a buyer of Groupon and LivingSocial after they go public? Share your thoughts in the comments box below.