Partnership of LivingSocial and Amazon

Graph credit: http://www.fastcompany.com/1721763/livingsocial-traffic-surges-80-groupons-declines-20?partner=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+fastcompany/headlines+(Fast+Company+Headlines)

An article came out today on Fastcompany.com saying that in the past week, the sales of LivingSocial, a leading group coupon website, has surged 80% last week, while at the same time, the #1 group coupon website Groupon.com experienced a 20% drop in sales. What accounts for the changes?

All of this happened with of LivingSocial’s partnership with Amazon, who offers to provide a 50% off of a $20 oucher at Amazon.com. An amazing 1 million vouchers were sold on this deal.

It draws us attention to corporate partnerships. Few firms operate in isolation. With numerous companies being around on the market, the right connections with the right companies play an important role in company development. The question of choosing what company to cooperate with and when needs every firm’s consideration when seeking for partnerships.

In the case of LivingSocial and Amazon, it is clear that the decision of both companies has been nothing more than perfect. For LivingSocial, it has always been overshadowed by the definite dominant website in the market and there is no obvious sign that it will catch up. After last December’s big buzz of Google’s potential $6 billion acquisition and Groupon’s rejecting it, a record-breaking amount of venture capital was raised and created a bigger gap between LivingSocial and Groupon. Amazon and LivingSocial have a lot of shared customers, who are very active on the Internet and are keen on online shopping. Being able to get a coupon of Amazon.com is very intriguing for LivingSocial’s existing and potential customers, which resulted in its skyrocketing increase in their numbers. At the same time, for Amazon, being not only a partner but also an investor with LivingSocial, the partnership of this deal will surely increase the value of LivingSocial and thus increasing the value of return on its investment.