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LivingSocial creates frenzy by selling $20 Amazon gift cards for $10

January 19, 2011 |  8:16 pm

The most buzzed-about daily deals site on Wednesday wasn't Groupon, but rather its main competitor, LivingSocial.

The site -- which sells vouchers for restaurants, spas, retail stores, teeth whitening and other services, usually at 50% to 90% off -- released a "once-in-a-lifetime" deal for a $20 gift card to Amazon.com. Cost: $10.

Not surprisingly, shoppers across the country snapped up the deal; with nine hours left, LivingSocial had sold more than 1.1 million of the vouchers, making it the most successful deal ever for the Washington,  D.C., company.

As daily deals sites have grown in popularity, they've moved beyond offering strictly local, mom-and-pop-type deals. Groupon made headlines last year when it offered $50 gift cards to Gap for $25; the site has also partnered with American Apparel and Body Shop to offer discounted gift cards.

The difference with Wednesday's LivingSocial deal was that the gift cards weren't sold by Amazon but rather by LivingSocial itself. That suggests the site might be losing money if it paid Amazon full price for the cards, although it could be chalking up the loss to advertising and marketing costs.

RELATED:

LivingSocial scores $175-million investment from Amazon

'Daily deals' sites turn discounts into a social media phenomenon

-- Andrea Chang

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