In the beginning of December, Google was poised to purchase group buying giant Groupon for an estimated $6 billion dollars. Groupon rejected the deal, and later released statistics calculating that it generated nearly $2 billion dollars in revenue last year ALONE. The potential of group-based buying is huge, and Facebook knows it. Recently, they released an extension of its Deals application, and is currently testing the service in select cities. I believe that Facebook can reach the masses in ways that Groupon can’t touch. Let me explain why Facebook is poised to become a hub for great deals and how it can be accomplished. I expect my coupon-clipping mother to be browsing Facebook for deals within the next few months…
1. Groupon Thrives with Social Sharing
If Groupon didn’t incorporate social sharing with their service, chances are they would be like many other small coupon sites on the web. At this moment in time, the Facebook platform accounts for a huge percentage of total online sharing and hosting deals will only encourage users to share them with each other. Put simply, sharing is simple and easy on Facebook – it’s built for sharing!
2. Email vs. Newsfeed
I am a current subscriber to Groupon, and I receive a daily email notifying me about the current deal that is available. The majority of the time, I will not even open the email, and I am not the only one who does this. Email open-rate percentages are very low, yet the Facebook newsfeed has proven to be a very effective platform for broadcasting news. I foresee Facebook utilizing an application that will alert users when certain pages they “like” offer deals. I believe this could also be integrated with GPS technology to send “push notifications” to one’s smart phone upon entering a certain proximity of the business location. In my opinion, this could create a harmonious relationship between social media and real-world transactions.
3. Personalized Deals
Another huge problem with Groupon is the lack of personalization when deals are offered. For example, I received a coupon to visit a salon, which I am not interested in at all. Groupon is currently making an effort to fix this problem, yet they still with have a difficult time extracting data from its users. Facebook on the other hand, collects data based on the pages you “like” and the information that you voluntarily post to your profile. This will prove to be a huge competitive advantage for Facebook.
4. 600 Million Users
I don’t need to explain this very much, but Facebook has 600 million users. This is a huge target demographic, and if Facebook incorporates this new technology efficiently, they can gain many subscribers QUICKLY.
5. Incorporation with Business Pages
Numerous businesses have already established their product or service on Facebook, and are actively promoting via their business page. I personally believe that a deals tab could be incorporated very easily, allowing businesses the ability to offer fans special coupons. This could also show many business the ROI of broadcasting specials on Facebook, a coupon is an easy method to track where people learn about the offer. I expect that the “ROI of social media” debate will be thrown out the window when dozens of customers show up with exclusive Facebook coupons.
6. Groupon’s Business Model
Groupon faces a host of competitors like Google Offers, Living Social, and many, many more. Why so many competitors? It’s simple – their business model can be duplicated very easily. Groupon has an advantage because of their large base of subscribers, but what happens when they are surpassed by Facebook? Facebook can offer a service that NO ONE can duplicate, which is part of the reason why I am so optimistic about Facebook Deals.
Final Thoughts
How will Facebook monetize? Will they monetize at all?
Will they incorporate Facebook credits?
Will deals be setup with a Facebook sales rep, or will it be self-service?
Will certain deals be exclusive for fans of a product/brand?
I predict that Facebook will incorporate this technology before summer, and by the end of the year (2011), they will surpass the number of Groupon subscribers.
[...] has a few tricks up its sleeves to break Groupon’s stronghold. Tests of its deal service, Deals, have just begun in five US [...]
[...] I wrote in an earlier post, Facebook has a huge opportunity to bring group buying to the masses. At the time I wrote the article, exact details concerning Facebook Deals were not released, yet [...]