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Groupon Leaps Into E-Commerce in the U.K.

(Bloomberg) — Groupon Inc. has begun offering discounts on products sold over the Web in the U.K., thrusting the Internet-coupon company into closer competition with the likes of Inc. and EBay Inc.

The Chicago-based company is advertising discounts of more than 80 percent off products to its U.K. customers. When users purchase a product deal, they receive a code to enter into the manufacturer’s website for a discount on their online order.

Groupon, which makes most of its revenue selling daily deals for local restaurants, hotels and other merchants, may be able to bolster its growth by adding vouchers for e-commerce sites. With its ability to send discounts to more than 115 million e-mail subscribers, Groupon could attract sellers that normally hawk their wares on Amazon and EBay, said Scot Wingo, chief executive officer of ChannelAdvisor Corp.

“One thing they do have that Amazon and EBay don’t have is the permission to touch over 100 million people daily,” said Wingo, whose Morrisville, North Carolina-based company provides services for online merchants. “There’s $500 million to $1 billion in sales they could drive just because of the scale of their subscriber base.”

Groupon’s National Deals feature has offered mattresses from UK-Bedding, teeth-whitening kits from Whitening Professionals and customized photo albums from Albelli. In each case, Groupon has sold more than 10,000 items.

Coming to America?

“It seems to be working really well, and I’m guessing once they get it to the point they feel good about it, they can bring it to the U.S.,” Wingo said.

Julie Mossler, a spokeswoman for Groupon, declined to comment on the effort.

Andrew Mason, Groupon’s CEO, referred to the initiative to sell products in an internal memo sent to employees on Aug. 25 that was obtained by Bloomberg News. He called it a success.

“We sold $2 million worth of mattresses in the U.K.—in one day!” Mason wrote in the memo.

The company’s main competitor in the U.S. is Washington, D.C.-based LivingSocial, which is backed by Amazon. LivingSocial is experimenting with new kinds of deals as well. The company plans to offer a discount with Whole Foods Market Inc. today that gives users $20 worth of groceries for $10. It’s the first nationwide grocery offer by a daily-deal company, said Andrew Weinstein, a spokesman for LivingSocial.

Groupon is expanding its services in other ways. The company has begun selling discounted concert tickets through a partnership with Live Nation Entertainment Inc. and cheap hotel stays through an alliance with Expedia Inc.

Groupon filed earlier this year to raise $750 million in an initial public offering. It’s now postponing the IPO because of the volatile stock market, people familiar with the matter said earlier this month.

MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

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