Google makes big changes to daily deals business

Reuters News
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Posted: Oct 27, 2011 1:49 PM

(Reuters) - Google Inc unveiled big changes to its fledgling daily deals business on Thursday in the midst of rival Groupon Inc's IPO roadshow.

The largest Internet search company said its Google Offers business will distribute daily deals from at least 15 other daily deal sites, including Gilt City, kgbdeals, TIPPR, Plum District and Juice in the City.

Google Offers subscribers in the San Francisco Bay Area will get the new deals first, but the company plans to roll out the bigger inventory of deals to new cities in coming months.

Google tried to buy Groupon, the largest daily deal site, for about $6 billion in 2010, but was rebuffed. Groupon is now pitching an IPO to potential investors at a valuation of roughly $11 billion.

Earlier this year, Google launched its own daily deals business, sourcing offers with its own sales force.

Google will continue sourcing its own daily deals, but the changes announced on Thursday mean Google can offer a lot more deals without expanding its sales force a lot. However, the company will likely be sharing revenue from the new offers with the other daily deal sites.

Groupon's roadshow has faced some doubting investors, who wonder how the company will be able to compete with giants such as Google.

Chief Executive Andrew Mason has argued Groupon's big sales force, which numbered about 4,800 recently, helps the company negotiate the best deals with the most merchants.

(Reporting by Alistair Barr; editing by Andre Grenon)