Amazon, which is building two massive distribution centers in the Richmond region, has brought its daily deal coupon business, AmazonLocal, to the Richmond area.
AmazonLocal Richmond launched last month and has offered discounts for local restaurants Strange Matter, Royal India Express and Stuffy Subs, as well as discounted carpet cleaning, eyeglasses and hypnotherapy.
Amazon joins a crowded market of daily deal sites, including Groupon and LivingSocial and other small and local copycats. Both Groupon and LivingSocial went live in Richmond in 2010.
Amazon didn’t respond to calls by press time.
LivingSocial spokeswoman Jody Gavin said the Richmond area has been receptive to the daily deal business, citing a Julep’s half-off promotion that sold more than 2,400 coupons. Richmond’s Cross Creek Nursery and Landscaping earned a spot on Groupon’s Best of 2011 list after selling more than 1,000 coupons on two separate promotions.
But Cross Creek Vice President Mark McAuliffe isn’t sure whether the deal generated any profit for his business.
“The jury is still out on the whole thing,” McAuliffe said.
McAuliffe said that the $40 coupons expanded Cross Creek’s customer base but that selling so many coupons meant giving away large amounts of steeply discounted merchandise — often without selling anything at full price.
“There are definitely people who buy the coupon and spend $40 exactly,” he said.
Julep’s owner Amy Cabaniss said her business benefited when customers redeemed the coupons because they typically spent more than the coupon offered.
She also said the deals are a great way to spread awareness for new businesses.
“Thousands and thousands see the offer, even if they don’t buy it,” she said.
McAuliffe agreed, saying he was pleased with the new customers Groupon and LivingSocial deals brought to his business. But Cross Creek will run fewer promotions in the future, McAuliffe said, as the promotions’ ultimate effect on the nursery’s bottom line is unclear.
Amazon’s move comes amid signs that the once red-hot daily deal market might be cooling.
According to a January Daily Deal Media report, the number of daily deal publishers dropped 7.61 percent in the second half of 2011, and Groupon stock fell to an all-time low below $9 per share Monday.
Amazon launched its daily deal business in 2011 by offering promotions with the help of LivingSocial. Amazon also owns a large stake in LivingSocial as a result of a $175 million investment in late 2010. AmazonLocal ran its first promotion independent from LivingSocial this March, according to a report from Reuters.