Google Unveils First National Daily Deal With REI in Push to Rival Groupon

Google Inc. (GOOG) is unveiling the first national discount for its daily-deals service with an offer from retailer Recreational Equipment Inc., or REI, as it ramps up competition with Groupon Inc. and LivingSocial.

Users can spend $15 to get $25 worth of goods at REI, which sells outdoor gear and clothing. The REI deal will be available to all users who have signed up for Google Offers in any city, even those where the service hasn’t yet arrived, said Eric Rosenblum, director of product management at Google. The company has rolled out its offers service in about 15 metropolitan areas in the U.S.

“Google, obviously, before getting into the Offers business, already had a set of great national clients, and we’re one of the few companies that can handle the kind of scale of an offer that will sell very, very large numbers of units,” Rosenblum said. “It’s fair to say this will become a common part of Google’s offering.”

Google, the world’s largest Internet-search service, is aiming to boost sales beyond its search-based advertising business by beefing up daily deals. The company said last week it added more than a dozen partners, including Gilt City and Tippr. Google said it’s also adding categories for adventure sports, luxury experiences and classes, as well as a personalization quiz to make it easier for users to find deals.

Groupon’s IPO

The company’s push coincides with preparations by Groupon, the largest provider of online coupons, for an initial public offering. Groupon, which is scheduled to price its shares later today, is seeking to raise as much as $540 million.

Google continues to expand even after other competitors, including Facebook Inc. and Yelp Inc., scaled back from the daily-deals market earlier this year. Still, Google had less than 1 percent market share in the U.S. and Canada during September, according to Yipit, which tracks the industry.

Google, based in Mountain View, California, had offered national merchant deals through providers such as movie-ticket company Fandango in the past, Rosenblum said. Still, they were only in specific cities, not for all subscribers. Groupon has offered a similar deal with Gap Inc. (GPS), and LivingSocial.com had a deal with Whole Foods Market Inc.

Google can use its existing relationships with large companies through its other ad services such as search-based advertising, Rosenblum said.

“The Offers product is something that is really good for local businesses, but large national retailers also see this as a great way of driving people from online to store,” Rosenblum said. “We’re doing it to be able to service Google’s large customers in others ways.”

Google also is unveiling a new application for Offers for devices that run on its Android mobile software.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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