Google Inc. and Amazon.com Inc. are just starting to rev up their marketing engines for their daily-deal services. Groupon Inc. and LivingSocial are the mainstays for now, but all four companies soon will face competition from PayPal Inc.
The company's president told Bloomberg News Dec.14 the eBay Inc.-owned company plans to launch a daily-deals service in the United States before April.
PayPal would rely on its users' past purchase histories and mobile technology to tailor daily deals, Scott Thompson told Bloomberg. Some 103 million consumers have PayPal accounts.
The biggest knock against the daily-deals providers is that they tend to bombard users with an excessive number of offers through emails and mobile alerts.
Many offers also are irrelevant to the recipient, such as nail salon discounts sent to a male consumer. Google is trying to fix this by asking consumers during the sign-up process from which kind of merchants they would like to receive offers.
PayPal's strategy is similar. "The experience is going to be completely different than anyone else's through and through," Thompson says of PayPal's offering. "We'll only give you something that we think fits the category of unique and relevant. Everyone else is going to bombard you."
PayPal and Google could be at an advantage over Groupon and LivingSocial if the offers are linked through mobile wallets. And that appears to be the case, notes Rick Oglesby, Aite senior analyst.
"Packaging a mobile wallet with daily deals seems like a logical approach to create the merchant demand," he says.
PayPal already has partnered with 200 merchants for the service, according to multiple media reports. The company did not respond to a request for additional comment about the service.
PayPal will be at an immediate market disadvantage when it launches the service. Groupon and LivingSocial accounted for 73% of market share in October, according to daily-deal data aggregator Yipit. The New York-based company provides monthly updates about the daily-deals market.
Groupon, LivingSocial, Amazon and Google in October sold $210 million worth of deals in the United States.
PayPal's reliance on past purchase histories is not much different from what others are doing but will become a common exercise in the future, Oglesby says.
"As [mobile] wallets and marketing [services] develop, you're going to see companies leverage whatever data they have to customize offers," he says.
What remains unclear, however, is which company's data would lead to the best results, Oglesby notes.
"Is it going to be past purchase history or search information from the Web," he says. "It's going to be a competitive landscape where everyone is going to be leveraging their core competencies."