Why Facebook’s “Groupon Killer” Deemed a Failure

Following Twitter, Facebook is now the second internet platform provider who has withdrawn their attempt to integrate live shopping into their service offering. As reported by Reuters:

"After testing Deals for four months, we've decided to end our Deals product in the coming weeks," the company said on Friday in a statement emailed to Reuters.

"We think there is a lot of power in a social approach to driving people into local businesses," Facebook added in the statement. "We've learned a lot from our test and we'll continue to evaluate how to best serve local businesses."

With this decision, one of the most potentially dangerous competitors to Groupon has been taken out of the game. In April, Exciting Commerce reported on how Facebook was well positioned in this arena with their combination of newsfeed, fanpage and email (“What Facebook is Doing Right With Social Deals”).

Apparently in the same boat as Twitter, Facebook underestimated the effort required to build the model and did not put enough manpower into the deals program:

"Facebook never put its full might behind Deals. It initially injected stories into the news feed asking users to sign up for the service, and later promoted the pre-paid offers with emails and real estate in the sidebar."

"In past reviews of the product, we criticized Deals regarding the quality of the experiences offered , the sometimes shallow discounts, and the way the experiences were ptiched to users.

Had Facebook subsidized businesses to provide deeper discounts on attractive experiences, and came up with a more compelling design for the Deals-browsing app, the results of the tests might have been different."

Marshall Kirkpatrick was one of the many who saw a “Groupon Killer” in Facebook Deals, and he summarizes on ReadWriteWeb:

"That's a lesson that any business should remember in a time of rapid change: the fundamentals and execution still matter, a lot."

Related posts:

• What Facebook is Doing Right With Social Deals
• Live Shopping: Twitter Ends Their @earlybird Campaign
• Facebook As Social Commerce Engine?

Originally posted in German by Jochen Krisch and Marcel Weiss, adapted for excitingcommerce.com by Jason Soo.

Comments

[Richard Sparks]

I think eventually, social media will become a key element of Ecommerce UK, with their already large database and the ability to share deals between friends and followers would be an incredible competitor to Groupon.

[Sharon Hill]

I agree with Richards comments, their is great potential in combing social media and eCommerce. There is a new FREE way of doing so which i find interesting and inovative , look at www.zizio.com. with their product it is possible to launch and share group sales on the retail site while integrating all the social media elements into it.

[Income Multiplier]

+1 to both of them, theres a ton of social media potential out there.