Will Groupon Inc (GRPN)’s Loss Be Amazon.com, Inc. (AMZN)’s Gain?

Amazon Launched Amazon Local in early 2011. Amazon Local is a local deal platform that uses both LivingSocial sourced deals as well as Amazon sourced deals. Based on Living’s Social’s Statement of Operations analysts at Bank of America Merrill Lynch think Amazon Local remains in investment mode and will likely not see significant profitability for several years. Assuming Amazon local is between 5-10% of the scale of Living

Social, they estimate Amazon Local will generate $45mn and $65mn in revenue in 2013 and 2014.

EBay a tough competitor

eBay Inc (NASDAQ:EBAY) has also proved to be tough competition for Groupon since it announced its Lifestyle Deals section in October last year. The online merchant has taken to social media in a big way by incorporating Facebook-like features in a bid to boost revenue from its services. Traditionally, eBay has focused on products, but understands the transition to services is a critical one.

eBay Inc (NASDAQ:EBAY) is rolling out a more robust search functionality and enhancing the personalized shopping experience. On the merchant side, eBay is creating an omni-channel approach for small businesses, helping brick & mortars leverage their stores base with location based services, eBay Inc (NASDAQ:EBAY) Now! and buy online pick up in store features The BRIC countries represent the next phase of growth, where pent up demand should be captured from localizing the shopping experience and enabling global shipping.

Similar to Amazon, eBay Inc (NASDAQ:EBAY) has formidable and profitable operations to internalize the initial losses generated by the group deals business. Facebook was also among the adopters of the daily deal businesses, but has since abandoned its efforts here.

Foolish bottom line

Like any growing industry, the daily deals business is evolving, and it is too early to say Groupon has lost the bet, although any negative publicity is only going to push its customers to Amazon and eBay Inc (NASDAQ:EBAY), both of which have the means and the intent of growing this business.

The article Will Groupon’s Loss Be Amazon’s Gain? originally appeared on Fool.com is written by Jacob Wolinsky.