What's the deal of the day? It seems like it might be another massive story for the social buying sites, with Amazon widely expected to announce a $150m investment in LivingSocial, a rival deals site to Groupon, later today.
While not quite pulling the reported $50m monthly revenues of Groupon - which is expected to be acquired by Google shortly for $5.4bn - LivingSocial claims its origins as a Facebook app meant it started life with a stronger viral base and was able to get off the ground with fewer resources.
Photo by smemon87 on Flickr. Some rights reserved
The UK scene is a little different, though both LivingSocial and Groupon have made in-roads, LivingSocial UK launching in June 2010 and Groupon accelerating its presence here by buying MyCityDeal in May.
We've been in touch with Phil Wilkinson, co-founder of UK discount site Keynoir (though he describes it as a 'local discovery engine' rather than a discounts site), who's helpfully illustrated each player in the social-buying space starting with that Groupon/MyCityDeal acquisition. That was Groupon's way of buying into the market by picking up the 'Asda' of the space in Europe.
LivingSocial is rather like Sainsburys: Wilkinson claims its UK business is growing slowly. Groupon, we have to assume is the Tesco of the social-buying space.
There's KGBdeals, owned by the 118118 people) which is akin to Lidl. Wowcher, Crowdity and Groupola (I sniff trademark problems with the latter) are all much smaller.
And then we have Keynoir, which launched in April. As you might expect, Wilkinson claims their product is higher end (Waitrose, if you will) because 40% of their deals are exclusive and more handpicked, they claim. Keynoir is backed by Index and PROfounders Capital but as the major European player left, will it be next for acquisition?
Wilkinson said the Amazon/LivingSocial tie-up was a no-brainer. "LivingSocial has made it very clear it wants to compete directly with Groupon and that it is currently in the number two position with eyes on pole position. To do this, it needs a big strategic partner with huge muscle and distribution, enough to compete with a 'Goopon' competitor. This can only be someone like Amazon or Microsoft."
He said Amazon's acquisition of Woot demonstrated a wider interest in ecommerce, though with no local commerce experience it would be likely to keep LivingSocial on the sidelines. "Once you get to a certain size, you can't run enough deals to keep up with demand and thus start turning towards a self-serve 'marketplace' so companies can run their own deals. This is something both Google and Amazon has vast infrastructure and experience with."
Aren't both the Amazon/MyCityDeals and Google/Groupon deals bad news for Keynoir? "It's actually good news, because they could slow down once part of the Google behemoth; there are already articles highlighting why Google is losing engineers to Facebook - it's too slow and bureaucratic - but they've done amazingly well so far to keep innovating.
"If Google keep them separate, a la YouTube, it might be a different story. Keynoir in particular is aimed at a different demographic - we always said we never wanted to be 'another discount site' but rather help people discover new handpicked things to do and go to around your city - with the deep discount/daily offer justifying making the purchase today. This space has lower volume than the mass market play of Goopon."
My email exchange with Wilkinson ended abruptly when I asked if Yahoo had approached Keynoir about a possible acquisition. That was a "no comment", but take from that what you will. I'd keep an eye on them.
• In other news, BitterWallet has a delightfully timed story of a not-so-great deal on LivingSocial, which apparently offered a £20 discount on Christmas trees that were made £20 more expensive just before the deal was announced.
• Update: Peter Briffett, LivingSocial's general manager for UK & Ireland, got in touch to protest that LivingSocial is actually "the 'Fortnum and Mason of local discovery engines" and that the Christmas tree offer was a glitch.
"At LivingSocial we always give true and fair deals - our customers expect this every day and the businesses we partner with are under contractual obligation to provide goods and services at the deal price. Our Christmas tree offer was a great deal and continues to be so - there was a temporary glitch but this has been resolved."