Without question, Groupon has been a tremendous business success story thus far, inspiring the legions on copycat daily deal sites, along with the previously unheard-of notion that coupons can, in fact, be cool. The latest major force to leap into the field dominated by Groupon and LivingSocial is PayPal, which is expected to start rolling out mobile daily deals in early 2012. Given the soaring popularity of daily deals over the past few years, though, the question worth asking might not be why PayPal’s entering the market, but what took it so long?
Plenty of major players have taken (or are currently taking) a crack at the daily deals market. Facebook bailed on its short-lived foray to compete directly with the likes of Groupon, while Google and Amazon are in the process of ramping up their daily deal offerings.
A Bloomberg story has it that PayPal thinks it can simply do daily deals better than Groupon or LivingSocial—which together account for nearly three-quarters of all daily deals purchased—or any other player in the field.
Specifically, PayPal says that its product will prove superior to other daily deals in two key ways: 1) It’ll mostly focus on mobile deals, so that instead of relying on the e-mail inbox, targeted offers will appear on members’ smartphones when they’re in close proximity to stores hosting special deals that day; and 2) PayPal President Scott Thompson promises that, thanks to the company’s intimate knowledge of shopper preferences, deals will be catered to the individual, and there will be a much higher likelihood that the user will actually want the goods and services offered:
“We’ll only give you something that we think fits the category of unique and relevant. Everyone else is going to bombard you.”
Neither of these ideas is particularly groundbreaking, though. Groupon has been promising more personalized deals since the summer of 2010. Both Groupon and LivingSocial have introduced mobile deals in many cities to tempt users into snagging a seriously short-lived discount, typically at a restaurant. But these kinds of instant deals haven’t been nearly as lucrative as originally envisioned. An October report from Yipit showed that while Groupon has been pitching “Groupon Now” as the business of the future, less than 1% of the company’s gross billings are coming from Groupon Now.
How will PayPal’s deals be genuinely different from what’s out there already? PayPal says it’s working with 200 top U.S. retailers, including Target and Best Buy, so it’s not hard to imagine how short-lived discounts that pop up on smartphones would be popular with shoppers passing by such major retailers—a contrast to the typical daily deal, which more often features mom-and-pop businesses. PayPal will also allow users to pay via their smartphones, thanks to a “mobile wallet” that’s linked to a credit card or (naturally) a PayPal account.
It’s still much too early to tell whether PayPal’s daily deal product will prove to be a game changer for the market, or just an also-ran in what’s still an exceptionally crowded field of players. Even if PayPal manages to do something truly different from the competition, there’s no saying that “different” will be viewed as “better” in the eyes of consumers.