Living Social and Amazon sell a bunch of stuff together and somebody loses money
Before we prepare the online coupon throne for King Groupon, competitor Living Social might have a word or two to say. Living Social, the Art Garfunkel of group buying, sold 1.3 million $20 Amazon.com gift cards yesterday for $10 each. The deal worked a little differently from most Living Social or Groupon deals where the retailer is selling the coupon to the customer and the coupon company acts as a broker and takes a cut. But here, Living Social bought the cards from Amazon and then sold them to customers, so it was Living Social that took the hit. We don't know how much they paid for the cards from Amazon, though, and presumably they got a discount. Amazon tends to operate on thin margins for its core products like books, music, and video. A big part of why this happened is that Amazon has invested $75 million in Living Social so we can maybe expect to see more of this down the road.
So is this the new frontier in shopping?