Facebook Deals – Will it beat Groupon and Living Social?

 Just like the tablet or mobile wars, the race for the best “daily deals site” is really starting to get vigorious. April 25thas ended the rumors about Facebook’s own daily deals site a long time ago when news was broken out that Facebook Deals is finally launched. This is the most powerful social media platform’s latest strategic move to diversify its revenue stream beyond advertising and become a name in the rapidly growing online bargain space. The site only started offering bargains to the US cities of Atlanta, Austin, Dallas, San Diego, and San Francisco at launch but the question keeps going bigger and bigger: Will it be able to beat the current dominant player Groupon? (Kirkpatrick, 2011)

What makes “Deals on Facebook” different from competitors like Groupon and Living Social is its focus on group activities, interesting experiences that people can enjoy together, do and share with friends such as concerts, events and some adventures and outdoor experiences.

They have worked with partners and local businesses like with Zozi.com, an adventure and travel deal site; PopSugar City, which offers food and lifestyle deals, and OpenTable, an online table booking service that includes restaurants from all across the US, to help deliver the best social activities in local area. Once people have found a deal they like, Facebook makes it easy to share, buy and plan with your friends. (Zuckerberg, 2011)

 On Facedeal home page, a small link at the bottom invites merchants and business owners to contact a Facebook salesperson and offer deals through the social network. It explains that the deals offered will be related to shared experiences only. It also provides details on how massively viral each deal will become; since every time a user expresses interest in a certain deal or buy the deal, his or her friends will be alerted.(Ortutay, 2011)

I think this new Facebook Deals channel can bring a huge new income source and stands a potential success for Facebook considering:

  • With a huge database and information of users, the existing businesses that already advertise on FB and as the world’s greatest viral marketing platform, Facebook can target different kinds of users with different, relevant and more customised deals and attract a large share of market traffic at a much faster pace.
  • Retailers and partnered businesses can approach to a huge source of customers information like their favourite music, TV show, your education level, some level of details about their friends and much more… when customers redeem a Facebook Deal at the events. This information is gold and going to be a powerful weapon for marketing and customers segmentation or retarget marketing efforts in the future.(US business – msnbc.com, 2011)
  • If Facebook Credits, the social network’s ‘currency’ which can only be used to pay for virtual goods in games at the moment, can be used to pay for tangible products and services in the future, can become the world biggest currencies within 5 years considering the restless growth of Facebook users.

However, the future and sustainability of Facebook Deals still has many concerns:

  • Brand image and dilution is one of my first doubts. If Facebbok is successful with this, the question raised here is “what is Facebook?” Is it still simply a social network or has become a shopping service? And if the latter happens, is this the right future for the site?
  • Privacy concern: This new service is far more viral and convenient for store owners, but will most people be willing to buy stuff through Facebook? Will they give a Social Network that already handles tons of data about them their Credit Cards data?
  • Access to local offers: A sale force is what Facebook lacks is what helps Groupon succeeded. Groupon has sales force that held the hand of local merchants and helped them see that advertising with Groupon was not unlike advertising in their local weekly newspaper. This is something that Facebook needs to think of to reach the local players.

It’s inevitable to think that Facebook over 600 million users poses a huge threat for Groupon and LivingSocial, but whether this new service will be powerful enough to kill the current dominant players depends on the quality and variety of deals Facebook will manage to offer and whether Facebook service offers a limited amount of deals for a limited time or will they change the whole daily deals concept will only be told by time.

Let me know Facebook fan, would you buy a deal through Facebook?

LH

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3 responses to “Facebook Deals – Will it beat Groupon and Living Social?

  1. This is an interesting post. No doubt FB will become a big player in the group buying sector. I will definitely buy with Facebook deal. It’s so convenient and it’s so easy to see referrals from others. With such a large user base, you just can’t fake the feedbacks on the deal. I don’t worry much about the diluting effect though, on the contrary I would love if FB could bring more and more features like this.

  2. I agree with the concerns in this post. Actually, people do not want to totally engage to any online community because of the privacy and intangible feature. Being a clean and useful online network is better than adding a lot of stuffs which might affect to customer benefit and be against its current mission
    However, if possible, Facebook may do the deal subjectively by updating lastest deals as reference in stead of selling it.

  3. Thank you for your article, I think it’s really interesting topic to talk about. I also did blog post about Facebook Deals.
    Personally I think that Facebook Deals a little bit different from the Groupon or other this kind of websites. How we already know, all products has it’s life time and different customers. Therefore some people who are ‘early adopters’ will try the Facebook Deals. Others, will stay with existing websites such as Groupon or Living Social.
    However, there is no doubt that hat Facebook can become really strong competitor for the existing websites, especially it has such a big ‘community’.

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