By Luanne Teoh on 08-05-2011

Amazon, the online retail giant is also planning to get a piece of the daily deal pie. Amazon Local, launched two months is now going head on with Groupon in its home turf of Chicago. Amazon Local launched its daily deals offerings starting in Boise, Idaho and has since expanded into 14 markets within California, Washington, Florida, Idaho and now Illinois.

Groupon has become the fastest growing company in history. In 2009, Groupon generated $30.5 million in revenue and in its second year of operation it brought in $713.4 million in revenue according to its IPO filing — Yup, that’s a growth rate of 2,241%. Groupon has declined to comment on Amazon Local’s entry into its home turf. Since Groupon has filed for IPO, the company is obligated to remain in a “quiet period.” While Groupon has withstood the onslaught of competitors from LivingSocial to Woot to Yelp — the competition seems to be getting fiercer with the bigger boys coming to play in the same yard. Namely, Amazon Local and Google Offers.

Nevertheless, Amazon Local has an advantage over Google Offers from its own massive and loyal customer base. Its customers are used to purchasing items from books to flashlights and barbecue sets, so buying from a familiar brand will be less of an effort all around.

According to Amazon Local “customers are already familiar and trust Amazon.com for their online purchases, and now with Amazon Local, they can also find great deals right in their own city. Amazon Local is a great way for residents of the Windy City to enjoy the restaurants, spas, and activities in their backyard.”

Ironically, this move will also put Amazon Local in competition with its partner and investment — Living Social. According to the Wall Street Journal reports: “At present, sales people from LivingSocial — a Groupon rival in which Amazon has an investment — are inviting the merchants for the Amazon local-deals offering. But Amazon said it has hired its own sales team for a standalone daily-deals offering planned for the latter part of this year.”

With Groupon’s recent IPO filing that’s looking to raise $3 billion, the competition definitely presents an interesting scenario all around for the daily deals business. A word of caution though. Before you run off to buy Groupon stocks on opening day, consider the low barriers to entry for this business model and the unusual meteoric growth the company has experienced – one that puts both Google and Amazon to shame.

Google, 2004 IPO

2000 revenue (first full year): $19.1 million
2001 revenue (second full year): $86.4 million
Growth rate: 352%

Amazon.com, 1997 IPO

1996 revenue (first full year): $15.7 million
1997 revenue (second full year): $147.8 million
Growth rate: 838%

About Luanne Teoh

Luanne is a senior correspondent for BizTechDay focused on Small Business Tech, Mobile and China based in San Francisco. In the last 17 years, she has helped launch start-ups and turned around failing operations. Her international work experience include both public and private corporations in Southeast Asia, Australia and North America. She has previously worked for Oracle Corporation, SonyBMG Music, Universal Music, Catcha Media and SOH Inc. Apart from a keen interest in technology, Luanne is also and avid explorer of the globe, cultures and people.

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