That's a wrap: Amazon Local to close before Christmas – what happened?
7 min read
02 November 2015
Amazon Local, the Groupon-like division of the online retailer, which works with merchants to sell daily deals to nearby restaurants, spas and so on, is to be closed on 18 December.
Today’s consumers love a bargain. This was proven by the Internet Advertising Bureau (IAB) UK in April when the firm revealed that Brits spent £16.5bn through deal websites in 2014.
The sum was a 14 per cent increase on the previous year as the report found 79 per cent of respondents turn to the channels for access to price reductions through cashback, voucher codes and loyalty rewards.
Following launch in 2008, Groupon is arguably one of the biggest names when it comes to the trend of platforms offering daily deals from local businesses.
The firm started expanding across the US and into Europe by the end of 2009, and in 2011 it secured mass exposure as part of a sketch on Ellen.
Interestingly, 2011 also marked Amazon’s foray into daily deals with the arrival of its Amazon Local division.
When pushing into Britain, Gordon Willoughby, director of Amazon Local for Europe, said: “This is day one for AmazonLocal.co.uk and we will focus our efforts on providing a first rate customer experience for Londoners.
“Our aim is to be the place where customers can come to find anything that they want to buy online, so offering great deals from local businesses like restaurants, spas and theatres is a logical addition to the tens of millions of products that can already be found at Amazon.”
It all sounded so promising – so where did it go wrong for Amazon Local?
It appeared the end was near in October when Amazon abruptly put an end to Amazon Destinations – a hotel booking service that was available in the Local app.
The “important update” said: “Effective 13 October 2015, Amazon Destinations has stopped selling hotel breaks on travel.amazon.co.uk and the Amazon Local app. All existing bookings will be honoured. No action is required on your part.”
It was a surprise move – given Destinations only actually launched in April this year. The US operation was also shut down, but a spokesperson would only say that “we have learned a lot and have decided to discontinue Amazon Destinations.”
Perhaps the lessons consisted of discovering that consumers are more accustomed to dedicated online travel services, such as Hotels.com, HotelTonight and Secret Escapes.
Read more on the trend of bargain hunting:
- Seven ways that offering discounts can boost your bottom line
- Tesco Brand Guarantee scheme to immediately match rivals’ prices at tills
- Shoppers shun big brands to save the pennies
Secret Escapes, of course, is a big fish when it comes to disrupting the online travel market – helped along quite nicely by Google leading a $60m Series C investment into the business this summer.
In addition to offering short breaks to luxury locations at discount prices, the firm also provides longer holiday options. CEO Alex Saint has revealed a mission to become a “global multi-billion turnover business by the end of the decade”.
Apparently, Amazon just couldn’t get the formula for working with small businesses right, as the Local division will be retired entirely on 18 December.
This comes just a fortnight after daily deals site LivingSocial, which is part-owned by Amazon, cut its workforce by 20 per cent to make 200 employees redundant. The restructure came as the firm turned its attention from discounts to become a “leading experiences marketplace”.
“On 18 December, 2015, Amazon Local will stop selling daily deals at local.amazon.co.uk and on the Amazon Local app. Deals purchased prior to 18 December, 2015 will not be affected by this change and remain valid as specified on the vouchers. No action is required on your part,” the company said in an email.
That means until 18 December, existing Local customers and businesses can continue buying and selling deals as normal. The decision to run until Christmas was likely in a bid to prevent damaging sales at businesses that find the service effective.
Offering a similar explanation to the one provided when Destinations was closed, Amazon said: “We’ve learned a great deal from the daily deals business and will look for ways to apply these lessons in the future as we continue to innovate on behalf of our customers and merchants.”
Local will live on in some capacity as the retailer said access to music, theatre and comedy tickets will be continue to be bookable at Amazon Tickets after 18 December.
That’s something. After all, access to theatre shows via Amazon was only introduced in March – just before the arrival of ill-fated Destinations.
At the time, Geraldine Wilson, general manager at Amazon Local UK, said: “Amazon Local has become a one-stop destination for the very best in entertainment, dining, travel and beauty experiences across the UK.
“The West End is a British institution, and now, our customers can choose from any show and book in just a few clicks, enjoying the glitz and glamour of London’s West End, all bookable in less than a minute.”
It’s proof that bigger isn’t always better and, in this case, Amazon doesn’t always get it right – even if it did experience a 23 per cent sales increase to hit $25.4bn in Q3.
In fact, remind yourself of the mockery Amazon faced on Twitter in July due to its failed attempt to eclipse Black Friday with Prime Day.