Amazon launches Local, the first real threat to Groupon's throne

by Knowlton Thomas

Sitting smugly on the dais despite crowding competition, Groupon's crown—while heavy—is nonetheless secure upon the Chicago company's head. For now.

Forbes dubbing the Groupon "the fastest growing company ever" added a sparkle to the company's already glowing sceptre, but underneath the velvet doublet, the group-buying giant is bleeding red ink and the company is perceived by many wary investors as the tip of a pin hovering dangerously close to a tech bubble.

Google tried to buy the throne, and Groupon refused. So Google launched a competing service that hasn't really taken flight yet. Well over a hundred other companies have also entered the space, and dozens more have entered the space as aggregators of the former.

Amazon partnered with LivingSocial, which has been one of the more successul daily deals ventures, but Groupon's armor remains unscathed.

Enter Amazon Local.

Amazon Local is the retail giants first real foray in the group buying realm and it plans to burst out of the gate on galloping horse with jousting spear poised and ready. Leveraging its connections with LivingSocial, Amazon plans to go balls-to-the-wall with Local in hopes of becoming a legitimate competitor, if not the market leader.

Certainly, Amazon has a more solid overall foundation. But Groupon's first-mover advantage has been a massive obstacle for all would-be competitors so far. Still, Amazon has tremendous experience in creating positive experiences with merchants and customers alike, something Groupon has certainly struggled with so far.

ReadWriteWeb observed that Groupon's competitors can be divided into two categories, above and below. Those below are startups with limited infrastructure and resources. Groupon's aggressiveness and first-mover advantage leaves these guys in the dust. The aboves, however, are more of a threat—American Express, Google, and above all, Amazon. Remember that Groupon is still a startup itself, just a couple of years old. It's growth has been exceptional, but it's not fully developed, and a fragility about it still remains. Less so with Amazon.

If Local launches with all guns blazing, Groupon should be about as scared as Facebook must needs be of Google+. That is to say, fear them, but also believe there is room in the Wild West of Web 2.0 for two major daily deal websites.

Vancouver, British Columbia, Canada, Inc. (NASDAQ:AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection., Inc., seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. and other... more

Chicago, Illinois, United States

Launched in November 2008, Groupon features a daily deal on the best stuff to do, see, eat, and buy in a variety of cities across the United States. We have about 200 wonderful people working in our Chicago office (a handful of whom you can see to your right), along with a smattering of people in Groupon's other cities. Our company philosophy is pretty simple: we treat our customers the way we... more

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes and author of Tempest Bound. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys hiking, tennis, and martial arts. more

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