Gift card

What LivingSocial's biggest deal means for Amazon

January 24, 2011: 11:58 AM ET

The implications of the Amazon flash sale go beyond 24 hours.

Photo: LivingSocial

Last week, LivingSocial offered a flash sale that lit up the web. For 24 hours, it sold $20 Amazon gift cards for half that price, and customers eagerly chomped at the deal. In the end, 1,378,938 million cards -- the equivalent of 7,600 an hour or 80 per second -- were sold in the U.S., and the resulting frenzy made headlines as the biggest LivingSocial sale to date and what the company argues was possibly the biggest flash sale ever.

"Overall what this deal showed is the power of the LivingSocial platform," says Maire Griffin, LivingSocial's Communications Director. "It was a great opportunity for members, new and existing, and it was great for Amazon, too. It proved that LivingSocial is here to stay."

Griffin is probably right, but the power of the platform really rests with the power of one of LivingSocial's biggest investors: Amazon. In the past, daily deals from Living Social have primarily focused on local services: a massage, a yoga session, dinner for two at a restaurant. But the Amazon (AMZN) gift card sale was notable for several reasons. LivingSocial wasn't just offering up another service, but veritable currency from the number one online marketplace -- and at half its value. Given the wide array of stuff consumers can buy off Amazon, it's almost like giving customers $10 for free. In which case, how could the deal get better? More

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