eBay Plans Daily Deals Site to Rival Groupon
Given the amount of negative news surrounding daily deals sites this year you'd be forgiven for not touching the industry with a bargepole. Groupon has been particularly hard hit, with early investors jumping ship, and the stock price slumping dramatically. Yet it would appear the demise of daily deal sites is not going to happen just yet.
At least that's the conclusion you jump to if the strength of the sector is judged by the size of those looking to enter it. Earlier this year Amazon launched a daily deals site in Britain, and reports this week suggest that auction giant eBay is soon to join them.
The suggestion is that eBay has been testing an online marketplace for deals to send it into direct competition with Groupon.
The new feature will be called eBay Lifestyle Deals, and it will originally offer deals in a select group of cities, including Los Angeles and Washington D.C.
"This is more competition for Groupon, but also more validation for Groupon's business," said Arvind Bhatia, an analyst at Sterne, Agree & Leach. "The market opportunity is big - that's why you have Google, Amazon and now eBay committing themselves."
It represents a big shift for eBay, who has traditionally sold only products rather than services. While it has offered daily deals on products for a few years now, this is the first time they have branched out into local services.
"We have a big marketplace and a lot of people who come to eBay don't just come for one thing - they stay and buy across categories," Devin Wenig, president of eBay Marketplaces, told Reuters in an interview.
"It makes perfect sense to experiment with new categories, and services is one of these things. We're seeing whether deals and services are attractive to our customers."
The new service will be powered by Signpost, who also supplies daily deals for Google Offers, another rival to Groupon.
eBay plans to add more deal providers if the effort goes well.
"Signpost is a merchant, just like merchants selling physical goods on eBay," Wenig said. "A merchant may sell local or even global services on eBay in the future."
So while Groupon started the daily deal industry back in 2008, it remains to be seen whether they will be around to enjoy the fruits of it or whether larger companies will snaffle their market share.