When three of the biggest dotcoms make a move on local e-commerce in the same week, one can’t help wondering that there is more to it than just coincidence.
On Thursday, eBay issued a press release announcing the acquisition of Milo.com, an online shopping engine focused on the provision of real time information on prices and inventories of products offered in local stores.
One day later, Amazon confirmed the investment of $175 million in LivingSocial.com; which started as a website where people could post comments on their favorite books, coffee shops or restaurants and then became quite a profitable company when it decided to follow Groupon’s business model of offering discounts for products and services provided by local businesses.
Finally, after a week of mysterious news articles written with the help of “undisclosed sources” that sounded more like hallway talk than serious journalism, on Saturday Bloomberg confirmed Google’s failed attempt to acquire Groupon for over $6 billion. On April, Groupon was valued in $1.3 billion when private investors such as Facebook financier Accel Partners devoted over $170 million. Eight months later it’s turning down $6 billion buyout offers! Could it really be worth that much?
Only time will tell if Gropuon’s decision to turn down the search engine was the right one, especially considering that LivingSocial, its closest competitor, has now established a synergy with Amazon in order to fuel its ambition to conquer once and for all the local e-commerce market. In the words of LivingSocial co-founder and chief executive officer Tim O'Shaughnessy "To be the biggest player in the local commerce space there is no one better to work with than Amazon."
So, why the sudden interest in local e-commerce? Here are some numbers that certainly answer the question without need of further explanation:
-Maybe because “channel shopping” sales , which stands for researching online for products that are bought offline, will be $1.3 trillion and account for nearly 50% of total retail sales by 2013.
-The $133 billion U.S. local-ad market might have something to do with it.
Groupon’s 35 million users and LivingSocial´s over 10 million must find local e-commerce sites useful.
-Technology developed by Milo will allow eBay to provide consumers with access to millions of products from approximately 50,000 stores across the country.
-LivingSocial estimates to reach the half a billion mark in revenues next year, while Groupon hopes to make that amount by December 31.
With the facts and figures cited herein, it is fair to say that local e-commerce might be the next big thing in the dotcom world.
While I'm of the mindset that Groupon's global charge and self-worth could be outpacing its actual ability to remain a top-tier site in its market, I think the whole idea of local e-commerce and "channel shopping" websites are a very good idea, and have plenty of room to expand in the future. It's obviously a helpful and practical idea that can benefit everyone who wants to take the time to do their homework on local businesses, the only real question is how carefully particular companies implement their business models, and how they look to build up their brand in the future (going national versus remaining local, national versus international, particular niche markets, etc.). As social networking in general continues to increase in our daily lives, this idea of "channel shopping" through specialized websites is a natural fit for the future.
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