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Groupon and eBay Partner for Incentive Promotions

By Nov 03, 2010

Groupon, the shopping Web site that offers a daily deal from local businesses, has entered into a partnership with eBay to offer incentives to eBay loyalty members who participate in Groupon deals.

As of last week, people who visit a co-branded Web site will find daily deals from Groupon. Members of the eBay Bucks Rewards Program who purchase the deals earn 5% of the purchase price back in eBay Bucks.

eBay pulls the local daily deals hosted on Groupon.com. The deals pulled are determined by the eBay user’s IP address and then geo-targeted so they receive the deal closest to them, Julie Mossler, a spokesperson for Groupon.com said.

Groupon operates by offering discounts with local businesses to groups of people with the deals activated only when a minimum number of people agree to buy.

As an example, one daily deal available yesterday in Chicago offered “$20 for $40 Worth of Fine Dining and Drinks at Capri Classic Italian Ristorante.”

“Teaming up with Groupon allows us to surface deals tailored specifically to eBay users and then reward them for shopping,” Kurt Apen, senior director loyalty and consumer marketing, eBay, said in a release. “The eBay Bucks Rewards Program is free to join and simple to use.”

Groupon is currently live in more than 100 North American markets and running nearly 200 deals per day. It continues a strong steady pace of entering new markets, including Halifax, Corpus Christi, TX, Honolulu and Westchester County in New York in the last few weeks.

A recent study from Rice University’s Jones School of Business let a bit of air out of Groupon’s business model. The study of 150 businesses running Groupon promotions between June 2009 and August 2010 found that those coupon campaigns were unprofitable for 32% of the businesses that ran them. And more than 40% of the response group said they would not run another social coupon promotion again.

The deals are promoted to Groupon members via daily e-mails. The speed at which the company, launched in November 2008 in Chicago, has grown has been dramatic, swelling from 1.2 million subscribers in October 2009 to 25 million worldwide this month. Andrew Kordek, the manager of e-mail optimization for the online collective-buying club, spoke with Sherry Chiger, the editor of sister brand E-mail Essentials, about managing the large subscriber base.