Exclusive: EBay tests deals on services, takes on Groupon

Wed Oct 10, 2012 3:44pm EDT
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By Alistair Barr and Phil Wahba

(Reuters) - EBay Inc has been quietly testing an online marketplace for deals on local services, expanding into a multibillion- dollar market currently led by Groupon Inc.

EBay is also re-designing its website, adding Facebook-like features it hopes will spur more sales.

Called eBay Lifestyle Deals, the offers are being run in a limited number of urban areas, including the San Francisco Bay area, Los Angeles and Washington D.C., according to the company.

Recent deals included $12 for a one-hour dog-walking service worth $25; $50 for a month of Yoga classes worth $110; and $180 for six private gym sessions worth $360.

"This is more competition for Groupon, but also more validation for Groupon's business," said Arvind Bhatia, an analyst at Sterne, Agree & Leach. "The market opportunity is big - that's why you have Google, Amazon and now eBay committing themselves."

Groupon shares were down nearly 4 percent to $5.07 in afternoon trading.

The move is potentially a big step for eBay, which has traditionally focused on products rather than services. EBay has run daily deals on physical products for about two years, but this is its first foray into discounted local services in the United States.

"We have a big marketplace and a lot of people who come to eBay don't just come for one thing - they stay and buy across categories," Devin Wenig, president of eBay Marketplaces, told Reuters in an interview.   Continued...

A sign is shown at the headquarters of eBay in San Jose, California February 2, 2010. REUTERS/Robert Galbraith