Amidst all the hype about social commerce, Facebook just launched its first test of Facebook Deals among several US cities. Deals is Facebook’s new group-buying platform, which competes with other sites like Groupon, LivingSocial, and Google Offers. All which allow users to receive daily deals on products and services relative to their location.
Groupon, the “big daddy” of group buying sites, currently claims they have over 40 million subscribers, and have saved their customers more than $800 million, clearly making them the largest market shareholder among similar sites in the US.
So where does Facebook Deals fit in? And how will it compete?
Here are a few ways beyond a user base of 500 million:
Social Reach: In comparison to other group buying platforms that utilize email, with Facebook Deals you will be able to “like” a deal, which will share it through your newsfeed, broadcasting the message to your friends. Group buying will be done among pre-established peer groups already online, where a deal or message can spread quickly, and organically. This is the reason so many marketers are already turning toward Facebook’s platform and establishing their brand’s presence through Fan pages.
Virtual Currency: Facebook plans to introduce a new payment system using virtual currency, which means users will be able to pay for Facebook Deals using “credits”. So whether buying a restaurant coupon, vacation package, or series of massage lessons, these credits will reduce the friction involved with online purchases, so users avoid pulling out their wallets every time they see a deal.
User Data: This is a big one, and the reason I’ll probably be signing up.
Facebook already knows its user base. They know your likes and interests. They know your age, sex, and occupation. They may even know your marital status and religion. With the recent addition of Facebook Places, not only could they know what city you live in, but also what neighbourhoods you frequent.
This personal data makes it extremely easy to connect users with advertisers. And Facebook has already proven this method by providing relevant advertising through their hyper-targeted display ad platform, which is expected to take the biggest US display ad market share in 2011.
Drawing from this example, it’s almost a sure thing this data will become a fundamental part to serving relevant, hyper-targeted Deals.
Of course, who knows what will happen in the end, but it could be just a short time before Facebook towers over platforms like Groupon, sliding into the driver’s seat of the group buying bandwagon. And if carrying deals so targeted that a mid-twenties ski bum in Vancouver can grab cheap ski tickets for the local mountains, I’ll be ready to hop on.