Amazon.com will offer $10 gift cards to its site for $5 on Tuesday through its daily deal website AmazonLocal in a bid to draw consumers to the 9-month-old subsidiary, CNN Money reports.
AmazonLocal, which uses a local deal-of-the-day business model pioneered by sites like Groupon and LivingSocial, has expanded to 90 cities in 26 states and Washington, D.C. since it was quietly launched last June in Boise, Idaho.
But the company has quickly become one of many new Groupon clones looking to cash in on the rapidly expanding daily-deals business, the Wall Street Journal reports.
"Some folks, even if they're Amazon customers, don't know about us yet," AmazonLocal vice president Mike George told CNN Money. "This is going to draw a whole bunch of people to check us out."
Though Amazon.com stands to lose money Tuesday by offering the half-price gift cards, the risk may be worth in the long run if the deal proves as popular as its first daily deal experiment.
In January 2011, one month after investing $175 million to build the site that would become AmazonLocal, Amazon.com ran a $10-for-$20 gift card deal on LivingSocial and ended up selling around 1.4 million of the cards, Mashable reports.
That success stands in stark contrast to the failed ventures of a number of high-profile companies that have tried their hand at daily deals. Most notably, Facebook dropped it's "Facebook Deals" service in August 2011 after a four-month trial run. Around the same time, Yelp scaled back its Deals department about a year after its launch.
Jim Moran, the co-founder of the deal tracking site Yipit, told CNN Money that even for big-name companies, launching deal-of-the-day services can be tricky.
"Clearly, people are interested in deals, and the market is growing. It comes down to offering deals in a certain context -- and if that's not right, a service can fail quickly," Moran told reporters. "I do think there's a space for Yelp and Facebook to benefit, but they need to figure some things out."
Correction: An original version of this story misstated the amount of money that was invested in AmazonLocal. Amazon invested $175 million in AmazonLocal.
Flickr photo by William Christiansen