“Mobile” is so early 2010. The end of the year has already brought two investments–and possibly a third–by major tech companies in the latest hot e-commerce topic: local shopping.
On Thursday, Amazon.com invested $175 million for a minority share in number two local deals site LivingSocial. On Tuesday, eBay spent an undisclosed sum on product search site Milo.com, which collects data about the products that are in stock at local stores. Meanwhile, Google is believed to have made much bigger bid for the biggest name in the sector, Groupon.
Behind the activity is a wider renaissance in e-commerce, which for years had developed little beyond the auction system pioneered by eBay and the one-click-in-your-pajamas shopping experience perfected by Amazon. But Groupon, in particular, showed that there are a host of local businesses that are ready to use online commerce to get people out of their pajamas, and into physical stores and businesses.
By some counts, there are now well over 150 local deal sites in the U.S. alone. LivingSocial claims it makes $1 million per day in revenue from selling things like discounts at pizza parlors.
The LivingSocial investment is Amazon’s first in the sector. Jeremy Liew, a LivingSocial board member and venture capitalist at Lightspeed Venture Partners, said the move by the ecommerce giant and his own firm’s re-upping its own investment in the startup underscores “what we think about this space.” He added: “All the big guys have taken notice of the category because it is growing so fast and throwing off so much cash.”
He said the investments in LivingSocial give the start-up the “dry powder” to pursue opportunities.
Still, LivingSocial faces a tough competitor in Groupon. Hitwise reports LivingSocial gets just 8% of the traffic in the U.S. among a category of 81 group buying sites, while Groupon gets 79% How can LivingSocial catch up with Groupon? Both Amazon and LivingSocial were tight-lipped about plans for growth, and how they might work together.
In a statement, LivingSocial CEO Tim O’Shaughnessy said, “As the social shopping space continues to heat up, LivingSocial is committed to staying focused on providing the high level of quality that consumers and merchants have come to expect when working with us.”
Amazon spokeswoman Mary Osako declined to “speculate about what we may or may not do in the future.” She said Amazon made the investment because it “supports companies like LivingSocial that are innovating new ways for customers to shop online.”
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