I’ve been trying to find information about Amazon Local since last week when a sales person in the US phoned me, as director of writingclasses.co.uk (my online international creative writing school), and offered me the chance to promote the school via Amazon Local. Basically, Amazon Local promotes discounted products to local consumers. It’s in the US and it’s coming to the UK. I found this description of it on a site on the net called Business Insider
“At first, it looks like a straight daily deals site by Amazon in the mould of Groupon: the deal today is 50% off ice cream and shakes at a local store.”
It sounds like a blend of Gumtree and Groupon. What’s wrong with that? This could mean big discounts for consumers. Great! But let me tell you what the cost would be to me, should I want to promote our courses on Amazon Local* – by the way, all our courses are online, which means we have students from around the world and being local isn’t an issue, which is just as well because the US sales person on the phone thought Edinburgh was in London! I digress … if we want to promote our courses via Amazon Local, we would have to offer our courses at half price. Some products are even discounted by 75%. Yikes!
Okay. Most of our courses cost £175. This means we’d have to offer them at £87.50. From this price Amazon Local takes its cut … and this is where it gets murky: I thought the sales woman said AL’s percentage was 25% , my partner said he thought their cut was 50% – the sales woman was very obscure. (Anyone know?) This would leave us with £65.62 (or, worse case scenario, £43.75) to cover the cost of running a ten week course. There are three main costs in running an online writing course: an admin cost; a license fee cost for the conference programme; and the cost of the tutor. The tutor cost is the greatest cost by far but our tutors are worth every penny. They are one of the reasons our courses are so successful and why we get so much praise, that and the fact our courses are such great value for money. If we promoted our courses via Amazon Local, our finances would look as in the chart below. Scary stuff!
So, no, we won’t be using Amazon Local, not if our aim is to keep offering students the best writing courses around, which it is. But bigger companies and organisations, wanting to take advantage of the huge Amazon customer base, who can afford big losses, may well do.
Please, don’t get me wrong, I like a bargain as much as the next person, but these parasitical titans like Groupon and Amazon Local don’t actually produce anything. They make their money on the backs of real businesses and if we’re not careful, or canny, little by little we smaller businesses are going to be pushed out. Only the giant businesses will be left, dictating what we buy as well as at what price we pay for it. It’s a very high price to pay for daily deals.
What do you think? Do you agree or disagree with me, or not care? Have you taken advantage of a daily deal before? Was it worth it? I know I have but will be thinking twice about it from now on! I’d love to hear from you. And to show how much I appreciate your comments, at the end of the month I’ll put the names of those who have been in touch in a hat and one lucky winner will win a copy of my book The Blue Suitcase!
*The deal actually comes from LivingSocial, which counts Amazon among its big investors, and it seems that what Amazon Local is doing is actually aggregating deals from other companies. Right now it’s just LivingSocial but there’s no reason why it wouldn’t include other players. There’s also a sweetener for using Amazon Local in the form of Visa reward points.”