Amazon has been in the deals market for some time. The company bought Woot! last year and has for several years offered “Gold Box” deals. More recently those have morphed into product deals of the day:
Amazon will be sourcing these deals from LivingSocial and probably others as well. This model is being used by Facebook and is equally available to Google, which so far is sourcing its own deals. The opportunity for Amazon is to combine products and services into a truly comprehensive offering, which nobody else is really doing right now. (This is also Savings.com’s aspiration.)
Amazon’s brand is also a great fit with deals. The company is apparently starting in Boise, Idaho but going to expand nationally. I was invited to submit my email address to be notified when there are “deals in my area.”
With the arrival of Amazon the “deals ecosystem” really begins to crystallize in my mind and consists of three or four broad components, with some companies occupying more than one segment.
- Consumer marketplaces: e.g., Facebook, Amazon, Groupon
- Aggregators/syndicators: e.g., Dealmap, LON, CityGrid
- Platform/white label providers: e.g., Yipit, DealOn, Group Commerce
- Sales channels: e.g., Groupon, YP publishers, Adility, etc.
As I said, some companies will fall into more than one bucket. And we could call these segments something other than the names I’ve assigned to them. The basic ideas are these:
- The consumer brands or places the consumer encounters the deal
- Middlemen that collect the content and then facilitate distribution of deals from source channels to consumer distribution points, which I call “marketplaces” above
- Infrastructure providers (i.e., White Label vendors) that enable publishers to sell/offer daily deals
- Sales assets that extract the deals from SMBs “on the ground”
Putting aside mobile apps and sites that monetize with deals (e.g., Foursquare, Where) it will be difficult for more than a few “horizontal” consumer-facing companies to exist in the brand or “marketplace” category. Verticals such as OpenTable or TravelZoo and sites that otherwise have an identity and usage (e.g., Yelp) can continue to offer deals. But there will only be 3-5 “big”horizontal sites in the space.
The same logic applies in the “aggregation” layer. There can only be a handful that have the scale the market requires. The infrastructure and syndication layers are the most volatile parts of the ecosystem I’ve laid out. That’s because there are, hypothetically, fewer barriers to entry here.
While there are many local sales channels and lots of “noise” in those local channels, sales is a vital and hard to quickly replicate part of the ecosystem.
This is very much like the “local search ecosystem,” which I laid out at Kelsey with Neal Polachek, with a big assist from Perry Evans, about five years ago now.
What have I missed? Do you believe it should be represented differently?