Look Out Groupon, Here Comes Facebook
Facebook has announced that it is launching its Deals platform in 5 cities: Dallas, Houston, Atlanta, San Diego, and San Francisco. It's clear that they've been eyeing the recent successes of giants like Groupon and LivingSocial who offer discounts to customers but collect a slice for themselves for bringing in business. Facebook Deals was launched in Europe before making it's way across the pond and the European platform model appeared to be free for retailers and merchants to offer deals directly to customers. With Facebook's user base surpassing 600 million, there is a substantial mass of potential eyes to view any given deal and will be implemented into an already successful platform. Where Groupon and LivingSocial have trouble is recruiting customers to their service, that is, the average person must view the benefits derived from using the service to be worth the effort to register for a new service. Facebook Deals basically throws this platform into the laps of 600 million users creating a very low adoption barrier.
It is clear that Facebook is gunning for any platform that takes advantage of a social experience, and with the critical mass already in place, the likelyhood that a user will utilize a given new platform is significantly more than an independent institution. This begs the question: how can start-ups compete with the Facebook giant? Right now that is a very difficult question to answer for the Deals platform, time will tell what the user response is once it is rolled out to other major cities.
The majors strengths of Facebook are: 1. Very talented engineers 2. A culture of building products and shipping them quickly 3. An extremely well developed customer base 4. A culture that embraces and promotes innovation in the social realm
As you might guess this is quite the deadly combination to compete against and their position is only growing stronger every day. I am personally interested to see if companies are going to start conceding to Facebook in regards to all things social, or will someone step up to the challenge and stare Goliath right in the face. In MySpace's heyday no one thought that the social networking site would be reduced to what it is today, but the mighty can fall. Facebook is quite different however, for many users it has become their identity on the internet. No bedazzled profiles or annoying songs auto playing when you check out someones profile, just a pretty accurate depiction of the person as they would actually be if you met them in real life. For many people Facebook has become their online ID and now Deals is positioning itself to be their personal online coupon book. I will be monitoring the reception to the platform closely over the next few months so expect a follow up to this post in the future.
In the meantime, what do you think about the Deals platform? A Groupon killer or just more spam in your news feed?