eBay Inc. (NASDAQ:EBAY) subsidiary PayPal is going to start competing head-on with Groupon and LivingSocial by offering daily deals starting next year. The coupons will be based on the buying habits and mobile locations of their users. PayPal has partnered with 200 U.S. merchants on this initiative said PayPal President Scott Thompson.
Thompson said that PayPal can use customer preferences better than LivingSocial and Groupon because of all the data they have. By moving into the daily deals market, PayPal will be able to take more money from their already existing 103 million members. Some of the daily deals may include groceries, salon visits, yoga classes, etc.
As of right now, Groupon and LivingSocial have a 73% market share in the daily deals market. Groupon is expected to make revenues of about $2.35 billion next year, which is a sevenfold increase from 2010. These daily deal coupons are supposed to keep customers using eBay beyond just the payment process. eBay bought PayPal in October 2002 for $1.5 billion.