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eBay tries to outdeal Groupon with its own daily deals

The online auction site is testing a new feature called Lifestyle Deals offering everything from meals to massages.

Screenshot by Lance Whitney/CNET

eBay is attempting to carve out a piece of Groupon's action with its own daily deals special.

Dubbed Lifestyle Deals, the new service is being tested in several cities across the U.S., including New York, San Francisco, Boston, Chicago, and Philadelphia. And it works much like the daily deals offered by Groupon.

eBayers in one of the participating cities can choose from a variety of deals each day. New Yorkers who spend $19 can win a walking tour of Central Park. Those in San Francisco can get their dogs walked for a full hour for just $12. And Dallas residents can score 80 percent off a two-month membership at a local fitness club.

Clicking on the deal you want brings you to the standard eBay page where you select the "Buy It Now" button to collect your package and pay via PayPal. You can also check out information and reviews on the seller.

Lifestyle Deals ties in smoothly with eBay's overall site, so it seems like a natural fit. But it is new territory for the auction company, hence the preliminary testing across key markets.

"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. "It makes perfect sense to experiment with new categories, and services is one of these things. We're seeing whether deals and services are attractive to our customers."

The daily deals marketplace is slowly getting more crowded as more companies latch onto the concept.

eBay is working with Signpost, which cooks up the deals with local businesses and puts them online, Reuters said. Signpost is backed by Google Ventures, which also handles the daily deals for Google Offers, a rival service from the search giant.

And what of Groupon? Already on a tailspin, the company's stock tumbled further yesterday after word of eBay's Lifestyle Deals hit the street.

Is the market big enough to handle more players? One analyst thinks so.

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

CNET contacted eBay for comment and will update the story if we receive any information.