PayPal to move into daily deals, threat to Groupon

The daily deals market may well be overcrowded, but that’s not stopping online payment giant PayPal from announcing its intention to get involved.

The eBay-owned company plans to use information from its 103 million members to offer deals tailored to their buying habits straight to their mobile phone when, for example, they’re passing a particular store. It believes that offering a location-based service like this will give it an advantage over other daily deals companies.

Bloomberg reported PayPal president Scott Thompson as saying the company hopes to begin offering mobile deals in the first few months of 2012. Market leaders Groupon and Amazon-backed LivingSocial, which combined had an estimated 73 percent share of the daily deals market in October, will no doubt be watching with great interest.

While a slew of companies have come and gone in the daily deals market, PayPal will be entering with more than 100 million people already on its books, with buying habits that can be analysed, giving it a big advantage over those that have tried and failed before.

In a recent interview with Bloomberg at PayPal’s San Jose HQ, Thompson promised an experience “completely different than anyone else’s through and through.”

He added: “We’ll only give you something that we think fits the category of unique and relevant. Everyone else is going to bombard you.”

Fear of competition in the daily deals market was said to be one of the reasons Groupon’s share value dived after the Chicago-based company went public at the beginning of last month. Launching at $20 a share, their value initially jumped by some 50 percent before settling at around the $26 mark. Toward the end of last month, however, they fell below the launch price to just under $17. Since then they’ve clawed their way back to around the $22 mark, though it’ll be interesting to see what impact the announcement by PayPal has on their value.

With research firm BIA/Kelsey estimating that the daily deals market could double in value by 2015 to $4.17 billion, it’s little wonder PayPal has decided to get involved.

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