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LivingSocial Sells 1.3M Amazon Deals, But At What Cost?

  |  January 20, 2011   |  Comments

Social-buying platform hits $13 million in sales during 20-hour period, beating Gap’s record-breaking ‘Groupon.’

livingsocial-amazonLivingSocial sold 1,301,296 vouchers for a $20-for-$10 Amazon.com offer that ended at 8 a.m. Eastern Standard Time. During a 20-hour run that began yesterday, the social-buying platform exceeded $13 million in sales, eclipsing the $11 million a Gap-Groupon deal brought in last August.

But which company paid for the $10 loss leader in the arrangement? NYTimes.com is reporting that LivingSocial purchased the vouchers from Amazon, which invested $175 million in the group-buying platform in early December.

The following copy appeared on the LivingSocial offer page in the "Terms and Conditions" section: "*Amazon.com is not a sponsor of this promotion." Washington, DC-based LivingSocial told ClickZ that it does not disclose financial terms of its arrangements.

At any rate, the company said messages sent via its Facebook and Twitter accounts helped the Amazon offer go viral yesterday in conjunction with sending e-mail to its 16 million subscribers. As of early Wednesday evening, LivingSocial told ClickZ the voucher deal had been shared on Facebook more than 31,000 times.

And those "shares" were often rewarded. When viewers bought the voucher, they would see copy that encouraged them to e-mail, tweet, or Facebook post the offer to their friends. If a LivingSocial buyer persuaded three friends to buy the Amazon offer, he or she got the deal for free. A unique URL that the person placed in his message to friends linked the referrals back to him.

Without question, Amazon's enormous footprint with consumers is the biggest reason the offer went viral. And with the e-retail giant's name on this campaign, LivingSocial was able to grow its e-mail list by up to 1.3 million in little more than a day. Indeed, voucher buyers opt in for future LivingSocial messages. Therefore, those e-mail addresses are not only fresh/active, but they also have purchase history attached to them.

But according to NYTimes.com, the addresses were not free of cost. It's possible they cost up to $10 per name.

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Christopher Heine

Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.

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