Amazon Confirms LivingSocial Investment

By Robert Davis
Dec 3 2010

Amazon, the largest US-based online retailer, announced today that they have invested $175 million in LivingSocial, a website much like now famous Groupon.

LivingSocial is another site in the same area as Groupon where users can buy, sell and trade vouchers from retailers and restaurants all over the US. They have gained favor with consumers who are trying to save a few dollars when making their standard purchases.

Google has been eyeing the same kind of deal with Groupon for the past several months but has been unable to make the deal. Now they have fallen behind as Amazon has staked their claim in the market, hoping to move LivingSocial from number 2 to number 1 with their new stake.

However, Amazon did not buy LivingSocial out right. Rather they bought a 7% share in the company that will allow them to reap the profits but still stay true to their core business, which is online retail sales.

The battle for such companies is expected to heat up. eBay recently announced a similar venture when they purchased startup Milo for $75 million. They were well-known to be interested in Groupon but said that the price was well above what they were willing to pay.

Amazon says that they will continue to work with LivingSocial to bolster their business plan and create better campaigns to attract customers. Now the industry is waiting to hear from Google on their plans to buy the number 1 contender in the market.