What Was Amazon Local? A Nostalgic Look Back at Amazon‘s Failed Daily Deals Service

Do you remember when Amazon tried to get in on the daily deals craze? If you were an online shopper in the early 2010s, you may fondly (or not so fondly) recall Amazon Local.

Amazon Local was the retail giant‘s attempt to tap into the wildly popular group buying and deals market by offering discounts on local restaurants, salons, activities and more.

While Amazon Local only lasted a few years before getting the axe, it was part of the company‘s constant efforts to expand beyond just ecommerce. As an Amazon customer, I was curious to learn more about what Amazon Local was all about and why it ultimately didn‘t succeed.

In this article, we‘ll take a nostalgic stroll down memory lane to explore the rapid rise and fall of Amazon Local. I‘ll share how it worked, why shoppers like me were intrigued, and what led to its demise.

Flashback to the Daily Deals Frenzy of 2010-2011

To understand Amazon Local, we have to go back to the early 2010s when daily deals sites were all the rage. Groupon pioneered the market in 2008 and became insanely popular by offering subscribers deep discounts if enough people signed up.

The group buying concept tapped into bargain hunter excitement and the fear of missing out. Practically every major city had daily deal sites popping up to imitate Groupon‘s success.

At its peak in late 2010 and early 2011, Groupon was valued at $1 billion and doing $50 million in monthly revenue. LivingSocial, its chief rival, also gained millions of users with its local deals.

Amazon wanted in on the action. Launching Amazon Local in June 2011 let them promote deals and discounts to compete with Groupon and LivingSocial.

How Amazon Local Worked

When Amazon Local debuted, it was available as both a website and mobile app for iPhone and Android devices. This allowed deal-seekers like me to conveniently access discounts on the go.

Amazon Local offered deals on things like:

• 50% off pizza, sushi or other restaurants
• 2-for-1 movie tickets
• 75% off yoga classes or gym memberships
• Spa and salon treatments for half off
• Local vacation packages and getaways

Here are a few real examples of the type of deals they offered:

• $20 for a wine tasting for two people (regularly $40)
• $12 for $25 of food and drinks at Joe‘s Crab Shack
• $29 for a 60-minute deep tissue massage (regularly $70)

The deals always had a time limit, typically 24 hours, to incentivize shoppers to act fast before the discount expired. You could browse deals nearby based on your location.

Once you purchased a deal, you‘d receive a voucher to redeem at the local business. Some deals had limitations like "valid Mon-Thurs only" or "not valid holidays," but it provided a way to discover new places and get deals you couldn‘t find elsewhere.

Amazon Acquired LivingSocial to Break Into Local

Amazon didn‘t roll out Amazon Local completely from scratch. To accelerate their entry into the space, they acquired a company called LivingSocial in 2016 for $175 million.

LivingSocial was very similar to Groupon. It offered deals and discounts at local businesses like restaurants, dentists, yoga studios and more in cities across the U.S.

It made sense for Amazon to scoop up LivingSocial. The technology infrastructure and existing supplier relationships gave them a head start in building out Amazon Local rather than having to start from zero.

LivingSocial also provided the expertise on operating in the daily deals space. At its peak, LivingSocial had roughly 70 million members around the world.

But just like Groupon, LivingSocial‘s growth started to stagnate by 2011 and 2012. The novelty of the deals space wore off, with fatigue setting in among consumers and merchants.

More on why the industry ran out of steam shortly…

Amazon Local‘s Marketing Tactics to Attract Deal Seekers

To promote Amazon Local and attract deal-crazed shoppers like myself, Amazon deployed a number of marketing strategies:

• Email campaigns – Amazon sent regular emails to subscribers pitching the latest local deals. The calls-to-action and formatting mirrored Groupon‘s emails.

• Mobile push notifications – When users had the app installed, Amazon could send real-time alerts about new deals available in your area.

• TV commercials – In some regions, Amazon ran TV ads showcasing the types of discounts you could find on restaurants, events, getaways and activities.

• Amazon site integration – The main Amazon website and apps featured various placements to surface Amazon Local deals and encourage sign ups.

• Social media ads – Amazon ran sponsored posts and ads on Facebook and Instagram highlighting deals in specific cities.

• Free credits – To incentivize new users to try Amazon Local, they offered $5 or $10 in free credits that could be applied to purchases.

Amazon certainly wasn‘t shy about leveraging their marketing muscle to get the word out. But as we‘ll see, intense promotion wouldn‘t be enough on its own.

Why Customers Like Me Were Drawn to Amazon Local

Speaking as a bargain-loving shopper, it‘s easy to see the appeal of Amazon Local deals:

• Excitement of discovering deals – There was a rush from finding and buying limited time discounts. The countdown clocks made it feel urgent.

• Trying new businesses – Local deals offered a low-risk way to sample restaurants or services you otherwise might not.

• Can‘t beat the price – 50-90% off sounded too good to pass up, even if you weren‘t in love with the business.

• Convenience – With the app, deals were easily accessible. No need to lug around printed coupons or vouchers.

• Desirable luxuries becoming affordable – High-end massages, steak dinners, hotels and things were suddenly within reach.

I had a couple friends who seemingly bought every Amazon Local deal available. The deep discounts were almost addictive. But the novelty did wear thin after a while…

Why Consumers Soured on the Daily Deals Model

While the daily deals model seemed amazing at first, it didn‘t take long for fatigue to set in among shoppers and merchants alike:

• Annoying fine print – Deals seemed less hot when you realized the catch like "only on Tuesdays" or other limits.

• Harder to redeem – Some places made the voucher process a hassle or only had limited appointment slots.

• More gimmicky than practical – Do you really end up going axe throwing or using those yoga classes? The novelty wore off.

• Discount overload – When you‘re receiving multiple deals emails everyday, it becomes overwhelming. The novelty wears off.

• Businesses didn‘t see ROI – Merchants didn‘t always feel the deals brought in loyal, profitable customers. Many stopped participating.

• Economic factors – During recessions, consumers cut back on discretionary services like massages, which impacted parts of the deals business.

The initial excitement around daily deal sites faded over time. Amazon Local was certainly not immune to these market dynamics.

Next, let‘s look at why Amazon shut down Local and if the failure was a surprise…

Understanding Why Amazon Local Ultimately Flopped

Given the downward trajectory of the daily deals industry by 2015, Amazon‘s decision to shut down Amazon Local wasn‘t a total shock. But what were the specifics behind why it failed?

There were three core factors that led Amazon to pull the plug:

1. Lack of profitability

For any new Amazon project, it needs to demonstrate the ability to be profitable at scale in order for the company to continue investing in it. Unfortunately, Amazon Local wasn‘t making enough money from the daily deals to justify keeping it going.

The cost of customer acquisition and retaining users was likely too high compared to the sales being generated. Especially with deals offering 50% or higher discounts, margins were thin.

2. Decline of the daily deals industry

By 2015 when Amazon Local shut down, the industry was way past its peak. Groupon and LivingSocial revenues had plunged dramatically compared to a few years prior.

Groupon, which once boasted a $1 billion valuation, was only valued at $2.17 billion in 2019. LivingSocial had massive layoffs.

Consumers and businesses had deal fatigue. Amazon couldn‘t reverse the larger industry trends.

3. Amazon core business was strong

With Amazon‘s primary ecommerce operations continuing to grow profitably, they didn‘t need to double down on an underperforming new venture.

And on Amazon‘s site, there were still deals in the form of coupons, Deal of the Day and more that consumers could access. So deals weren‘t disappearing completely.

When Did Amazon Shut Down Local for Good?

In October of 2015, Amazon announced that Amazon Local would be closing down on December 18, 2015. This gave users a couple months of lead time to use up any remaining credits or vouchers.

The company communicated the closure in an email to all Amazon Local members in mid-October. The email offered tips on how to redeem and maximize deals before the shutdown date.

While new deals stopped being offered after the closure announcement, Amazon allowed customers to continue redeeming any previously purchased deals after December 18. So Local didn‘t completely vanish overnight.

How Available Was Amazon Local at Its Peak?

Amazon Local launched in a handful of cities when it debuted in 2011 but eventually expanded into around 40 major metro areas in the U.S.

Some of the key markets where the service was available included:

• Los Angeles
• San Francisco
• Seattle
• San Diego
• Phoenix
• Denver
• Washington D.C.
• New York City
• Chicago
• Atlanta
• Houston
• Miami

Customers within those metro regions could access deals on businesses in their cities. Deals were targeted using ZIP codes and proximity to confirm you were local.

Having a presence in around 40 of the biggest cities still gave Amazon Local fairly large geographic coverage to attract deal seekers across different regions.

Did Amazon Local‘s Failure Damage the Company?

Because Amazon Local was never more than a side project for Amazon, its failure didn‘t make much of an impact on the company‘s bottom line or brand reputation.

Amazon‘s core retail operations continued surging forward with growth in this timeframe. Amazon Prime membership was also accelerating.

One analyst estimated that the entire Amazon Local business in its best years amounted to less than 1% of Amazon‘s revenue. So it was never material to overall company performance.

For a behemoth like Amazon, they can afford to experiment with many different projects. Some pan out brilliantly (like Amazon Prime) while others flop. But misfires like Local get quickly drowned out by the successful product launches.

How Amazon Local Compares to Amazon Local Selling

If you sell products on Amazon‘s Marketplace, you may be familiar with Amazon Local Selling. But this is an entirely separate program from the old Amazon Local deals site.

With Amazon Local Selling, local brick and mortar businesses can offer quick local delivery and in-store pickup on Amazon for customers near their physical stores.

The benefits include:

• Exposure to Amazon‘s huge buyer base in your geographic region
• Ability to advertise fast same-day delivery or pickup options
• Improved management of local order tracking and fulfillment

So Amazon Local Selling helps small businesses leverage Amazon‘s platform to connect with local customers, unlike the Amazon Local deals which were focused on consumers discovering discounts.

Lessons Learned From Amazon Local

While Amazon Local will never be remembered as one of Amazon‘s high points, the company likely gained some useful knowledge from its failed experiment in daily deals:

• Importance of profits – Amazon needs businesses to be self-sustaining, not propped up artificially. Local wasn‘t covering its own costs.

• Focus on core strengths – Stretching too far outside your core model can be risky. Amazon excels in ecommerce and products.

• Deals have limited appeal – Amazon has found success with Prime and coupons, but deep discounts/group deals are harder to sustain.

• Localization challenges – It‘s tough providing a hyperlocal experience at national scale. Other local efforts like Amazon Restaurants also closed.

• Market timing matters – Amazon Local‘s debut aligned poorly with fatigue settling in for the deals space. Being late hurt their chances.

The Legacy of Amazon Local

Although Amazon Local was short-lived, for deal-loving shoppers like me in the early 2010s, it taps into nostalgia about the excitement surrounding daily deal sites and wanting to discover “hidden gems” at a bargain.

While the enthusiasm faded as the economics fell apart, it‘s a reminder that even a hugely successful company like Amazon won‘t win every time they try branching into new spaces.

At the same time, Amazon continues taking chances with new initiatives in streaming, brick and mortar stores, prescription drugs and more. So the lessons from Local are unlikely to make Jeff Bezos shy away from the next big idea, even if it doesn‘t look like a guaranteed success on day one.

Amazon Local occupied just a tiny, fleeting moment in the company‘s history. But for deal hunting customers like myself, reliving those days of scoring rock bottom restaurant and spa deals provides a fun throwback.