PayPal to enter the daily deals market in Q1 2012, according to unconfirmed report

LOS ANGELES , December 14, 2011 () – According to an unconfirmed report, PayPal Inc., eBay Inc.’s payment arm, is planning to enter the daily deals market during the first quarter of 2012, Internet Retailer reported on Dec. 14.

The report said that PayPal would use its knowledge of consumer’s preferences to offer customers deals that are tailored to suit their interests and location.

BIA/Kesley Group, a market research firm, estimates that daily deal industry will generate $4.2 billion in U.S. consumer spending in 2015. Last year, the daily deal industry, which currently consists of over 600 discount providers, generated $873 million in U.S. consumer spending.

PayPal, which does not break its membership by country, has 103 million users worldwide.

According to eBay’s financial reports, PayPal had a revenue of $1.1 million in the third quarter of 2011. Approximately half, or $551 million, of that amount was generated from sources outside of the U.S.

Greg Sterling, the found of Sterling Market Intelligence Inc., said, “PayPal has a very large user base and has the potential to succeed with local and retailer offers. However, success isn't guaranteed. It would depend on the quality and types of offers.”

He added, “The market has the ability to support numerous players but not the hundreds that currently exist. My guess is that PayPal would become an aggregator or distributor of third-party deals. Building a sales channel to source local deals is an expensive and challenging proposition.”

The primary source of this article is Internet Retailer, Chicago, Illinois, on Dec. 14, 2011.

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