PayPal Plans to Compete With Daily Deals

EBay-owned PayPal surprised the business world this week in announcing that they plan to compete with the daily deals market. How will they do it?

The PayPal Plan

Unlike traditional daily deals websites, which release time-limited sales and special offers to consumers via websites and smartphone apps, PayPal plans to jump into the business of mobile coupons. Much like Yowza, a company that pushes money saving local coupons to shoppers’ iPhone and Android smartphones, PayPal has high hopes to save consumers money by putting coupons in their pockets. Unlike Yowza, however, PayPal has a distinct advantage: they will use consumers’ purchasing data to determine which coupons they’re most likely to need and use.  Scott Thompson, eBay President, told the Bloomberg News Agency this week that PayPal will tailor its offers based its 103 million members’ purchasing history. PayPal plans to make their mobile deals available to shoppers before April 2012.

Can PayPal Compete?

The deal-of-the-day business model grew out of the 2009 recession and has been going strong ever since. Industry leader Groupon is today worth an estimated $13 billion and shows no signs of slowing down.  And thanks to daily deal aggregators, which sort through the hundreds of daily deal offers presented to the web daily and send only relevant deals to consumers, daily deal fatigue is quickly becoming a thing of the past. Clearly, daily deals aren’t going anywhere. And if you hold fast to facts, a recent BIA/Kelsey study forecasts that daily deals will more than double by the year 2015.

PayPal’s new vision isn’t exactly new or particularly noteworthy. Mobile couponing websites like Yowza, MobileCoupons.com and CellFire have made more than a dent in the mobile coupon market and have gained the trust and loyalty of shoppers in America. It remains to be seen how privacy-weary consumers will actually feel about PayPal snooping through their purchase history in order to push only relevant coupons their direction.

And while we can’t forecast the success or failure of PayPal’s new venture, one thing is for certain: the prospect of competition can only mean that more and better deals will be made available to savvy shoppers. And that’s a win for everyone!