But while the head of local online deal-a-day site Catch of the Day Gabby Leibovich says the deal underlines the success of the business model, he had disputed the seemingly low purchase price, saying his own site is worth that amount and Woot's value would certainly be much higher.
Woot, founded by electronics wholesaler Matt Rutledge in 2004, pioneered the one-item-per-day concept. Each item is listed on the site until sold, or the day ends and a new item is listed.
The site has attracted a loyal following, particularly among younger buyers, many of whom are members of the site's forums.
News of regular "Woot Off" sales, during which the site regularly updates with new products even within a single day, quickly spreads across the internet resulting in items selling out within minutes.
The company runs Photoshop contests for forums users who receive cash prizes, and its Twitter account is among the 100-most popular on the microblogging site. TechCrunch reports its 2007 revenue was just over $US100 million.
Rutludge, known for his unusual sense of humour, posted an internal email on the Woot website announcing the deal. The company will remain in Texas, according to the announcement, will maintain its management and will operate under the Amazon banner.
"I know I say this every time I find a picture of an adorable kitten, but please set aside 20 minutes to carefully read this entire email. Today is a big day in Woot history. This morning, I woke up to find Jeff Bezos the Mighty had seized our magic sword."
"We plan to continue to run Woot the way we have always run Woot – with a wall of ideas and a dartboard. From a practical point of view, it will be as if we are simply adding one person to the organisational hierarchy, except that one person will just happen to be a billion-dollar company that could buy and sell each and every one of you like you were office furniture."
TechCrunch has reported the sale was made for $US110 million, and entirely in cash. The deal gives hope to similar concepts in Australia, including Catch of the Day and Daily Deals, which have followed the Woot model with solid success.
But Gabby Leibovich, who runs Catch of the Day, says the $US110 million figure offered by TechCrunch is an undervaluation. He says due to the company's wholesale connections, it almost certainly is worth more."
"I'm delighted the sale has occurred because it shows the model works. We have been following that model, and we think we've improved on it and are doing better than them per capita. It tells everyone the space is one to watch."
"But there is no way that is the price. They have many wholesale connections, make most of their money from that route, and they would be making much, much more than that valuation suggests. We would be worth that amount, but they are worth much more."
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