As announced last Fall, Facebook wants to become an engine for social commerce. Moving in this direction they have test launched Social Deals in selected US cities. “Social Deals” is Facebook’s response to Groupon and LivingSocial and is the second deal program from Facebook after “Check-In Deals” (originally called Facebook Deals, but now renamed to avoid confusion):
"Check-in deals are free to users; they’re mobile centric and operate like conventional coupons. By contrast Facebook’s new Social Deals, like Groupon or LivingSocial, must be purchased up front using money or Facebook Credits (the first use for real-world products/services). You actually buy a voucher that is then redeemed offline."
Like Groupon, Social Deals focus on local businesses. Besides offerings which are arranged by Facebook’s own sales team, deals are also piped in from eleven partners:
- Gilt City
- Home Run
The goal of Facebook is to focus on offerings which already contain some kind of social component, an example being events. This makes sense: such deals would spread the fastest on Facebook’s newsfeed.
Facebook has selected a fairly self-evident redistribution mechanism which is nevertheless interesting to examine and is already more or less built-in to the network:
"you can Like deals without buying them — or before buying them. If you Like a deal it will be exposed through your feed.
You can also share and privately invite selected friends and ask them to join you or expose them to a deal. Facebook users can message each other and discuss the deal as a group before collectively buying."
A similar example has been detailed in the Live Shopping Day’s presentation on the Social Web pattern:
‘As end user I see in my stream a deal which I find interesting (example: discount theatre tickets). At this point I am not yet sure if I want to buy it. I click on a “maybe” or “interested” button.
My ambivalent interest on the tickets is communicated to my network of friends. Very similar to how clicking on “Like” on a website transfers the content to my Facebook newsfeed. My friends can then react and contribute their opinion like “hey, we can both buy tickets and go together”.’
The visibility of the deals should be pretty well guaranteed on the Facebook platform:
"Like traditional daily deals Facebook Social Deals will come through email but also through the Facebook news feed. And they may potentially be exposed via Facebook Ads as well."
Participating merchants will need to set up a Facebook Page. What may at first seem like a bureaucratic task: it is actually a way to help convert bargain hunters to regular customers. Particularly interesting in this context is the bi-directional boosting effect between Facebook Page and Social Deals:
"With Facebook Social Deals local merchants can direct new customers to Like them on their Page and — voilà — they have a CRM platform. Merchants can then potentially start a “conversation” with these new customers.
While many SMBs set up a Page and then wonder “What now?,” Facebook’s Emily White says deal buyers (new customers) will help flesh out and populate content on SMB Facebook Pages. Indeed, this is the secondary mission of Social Deals — to get more SMBs to create and then really use Facebook Pages."
All of this seems much better thought out than Google's reaction to Groupon, which has also recently gone into test phase. While Social Deals seems like a logical extension to the core business of Facebook, Google Offers is like a clumsy effort thrown in to not miss the boat.
Facebook has over 600 million active users and for this mass, has perhaps the most efficient distributions channel on the net (the newsfeed). They can concentrate their deal offerings on where they operate best: social.
Anything to fear for Groupon, LivingSocial and the others? Not necessarily. Like many new markets, we are finding ourselves at the beginning of a growth phase. We are therefore not talking about a zero-sum game where the market growth of one player is at the cost of the others.
Furthermore the launch of Facebook Places last summer has shown that a market entry by Facebook is not necessarily a knock out blow to specialised startups. Foursquare, for example, is getting along just fine.
More interesting is whether or not Facebook at some time will develop platform components for Social Deals in the same way as they have done for Facebook Places. Such a move would make sense and would be consistent with the business development strategy that the social network giant has demonstrated in the past.
Facebook will be accepting Facebook Credits in addition to credit cards as a method of payment.
- Facebook As Social Commerce Engine?
- One Click Gestures and the Social Web Pattern in E-commerce
- Is Groupon Developing in the Right Direction for the Long Term?
Originally posted in German by Marcel Weiss, adapted for excitingcommerce.com by Jason Soo.