The group-buying scene is set to become more competitive, following Facebook's launch of its own “Deals”, which went live in five US cities on Tuesday.
The social networking giant has been testing the daily-deal waters for some time, with its location-based Places reward system, and Check-In Deals, which gave users special offers when checking in at certain local businesses.
“We're going a step further and testing a new feature to help you find fun experiences to share with your favourite people,” says director of local at Facebook, Emily White.
Initially, Deals will only be available to people in Atlanta, Austin, Dallas, San Diego and San Francisco. “We hope to expand this test to other cities in the future,” says White.
Following the Groupon model, Deals on Facebook offers discounts on products and services. Leveraging its social networking capital, Facebook says that, while Deals will offer discounts, “it's more important to us that you find interesting experiences around you to do with friends.
“We've worked with partners and local businesses to help deliver the best social activities in your area. And once you've found a deal you like, having the deal on Facebook makes it easy to share, buy and plan with your friends,” writes White on the official Facebook blog.
Social advantage
Facebook has been priming the service for release for the past few months in an attempt to build a large subscriber base. Deals was soft-launched in mid-March with news feed stories asking users to sign up to hear about local prepaid group experiences.
Localised marketing e-mails were also sent to people who admin pages relevant to the areas in which Deals is being tested.
Analysts say that by serving updates directly to the news feed, Facebook Deals will have an advantage over Groupon and other daily deals providers, which are said to spend millions on Facebook ads to attract customers.
While Facebook is late to enter the group-buying market, the social network has a captive audience of 500 million users worldwide. Groupon has an estimated 70 million subscribers.
Facebook could potentially add a community aspect to group-buying that has been lacking in the established services.
Twitter has also tried its hand at daily deals with its programme called “Earlybird Offers”, which was launched last year. The programme was cancelled after two months.
Analysts predict Facebook will lend itself better to the market due to its structure and more intuitive sharing capacities.
Captive market
According to research firm Experian, visits to group-buying sites have grown 10-fold within the last year.
While it may still be a while before Deals on Facebook extends beyond the US, in SA, group-buying has seen growing momentum and is becoming increasingly competitive.
Groupon has a local presence in the form of MyCityDeal, and there is also competition from UbuntuDeal, Dealio, Skoop, Wicount, Dealson and the newly launched Zappon.co.za from Avusa.
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