Tomorrow Amazon is offering a special deal: a $10 Amazon egift card for just $5.
It part of a promotion for the company's daily deal service AmazonLocal, a service similar to Groupon or LivingSocial. The venture is just nine months old and many loyal Amazon.com customers aren't even aware of the service. Naturally, this will help increase awareness as many of us will opt for the gift card discount and visit the website.
To take advantage of the offer, just visit AmazonLocal.com and sign up for an account. If you're already signed into an Amazon account you can just make the purchase. According to Amazon's gift card deal splash page this is a limited-quantity deal.
Clearly this is a result of LivingSocial's successful promotion, back in January 2011, when they sold $20 Amazon gift cards for $10. At the time I referred to it as the best daily deal so far and given Amazon's gift card deal is half the value and limited in quantity, LivingSocial still holds the title.
Some might wonder why or how a company can afford to provide such an offer. In short, it's a rather effective customer acquisition strategy. LivingSocial sold over one million Amazon gift cards. That's 20 million dollars in gift cards sold at 50% off in just one day.
Let's keep the math simple and assume they paid full price for the gift cards. That's means it's a $10 million dollar promotion and while it many seem like a waste of money, a $10 customer acquisition cost seems much more reasonable. That's assuming customers who signed up for an account didn't unsubscribe shortly after they took advantage of the deal. Also, you have to assume the lifetime value of a customer is much higher than $10.
Clearly Amazon learned from the LivingSocail experiment. They aren't willing to go so high on this offer and they capped in the number of gift cards they will offer at a discount. Perhaps five bucks is enough to get people talking about the service and visiting the website.
In either case, this is a great offer and I suggest taking advantage of it while it lasts. I'll be watching the numbers to see where the deal is capped. I'll take a guess and say 500,000 gift cards, so visit AmazonLocal tomorrow and get a free $5.00 to spend on Amazon.com.