Facebook is preparing to launch a new competitor for deal-of-the-day sites like Groupon and Living Social called Facebook Deals. The social network wrote, “Try new things with friends. With Deals you can easily find great new restaurants, shows and group activities to share with friends.”
The program will allow Facebook users to get coupons and discount offers from partner services. Facebook has not announced if it will require a minimum number of buys before the deal can be claimed, similar to what Groupon does.
Facebook has also launched a business version of Facebook Deals where it partners with your company and does the marketing, generates a buzz and sales for your deal and builds customer loyalty.
With over 600 million users, Facebook has a vast audience to introduce this new flash deal subscription to, and may give Groupon a run for its money; although it may be hard for any newcomer to catch up to Groupon. According to eMarketer, Groupon had $33 million in sales in 2009, and sky-rocketed to $760 million in 2010.
Look for Facebook Deals to create a presence in your Facebook newsfeed and social network soon.
Nearly everywhere you turn, someone is talking about that amazing deal they just got on Groupon, or the too good to be true promo they took advantage of on LivingSocial. All this talk may leave you wondering…What exactly are Groupon and Living Social and more importantly, what’s the catch? Basically, what’s the deal with Deal of the Day sites?
Here is the lowdown…
Groupon started in November 2008. According to the FAQ’s on their website, Groupon is “a deal of the day website that feature’s an unbeatable deal on the best stuff to go, see, eat, and buy in your city.” Click here for Wikipedia’s definition.
LivingSocial is very similar to Groupon, in that it offers daily deals too. Though maybe not as well known as Groupon, according to Wikipedia, LivingSocial was actually founded a year before Groupon. They did not start offering Deals of the Day; however, until after Groupon had already made a name for themselves.
So what’s the catch? There is no catch; at least not for the consumer (more on this later). These too good to be true deals, are not too good to be true. I know what you’re thinking. How could I actually get a $50 gift card and pay only $25? Groupon and LivingSocial (and many other new Deal of the Day clones that seem to be popping up on a regular basis) pride themselves on offering deals that are simply too good to pass up. In fact, they are banking on that concept.
Here’s how it works for retailers: The retailer who is offering the Groupon or LivingSocial Deal of the Day pays nothing to showcase their service or product; however, Groupon/Living Social etc. will take somewhere between 40 and 60 % of the earnings. For this reason, this model will not work for every retailer and in some cases could unfortunately end up hurting more than helping. It truly depends on how much margin a company has with their products or services. Think about it this way: If you normally charge $100 for a product and are offering it for $50, then paying Groupon $25 per sale, you better make sure your margins will still allow for a positive ROI, or a strong lifetime value for that customer.
Here’s how it works for consumers: As a consumer, you simply have to sign up to receive daily deals in your city and voila! The daily deal in your city will be waiting in your inbox for you to take advantage of! On the go and rarely log onto a computer? No worries. Groupon has an app, as does LivingSocial.
Although Groupon is the current 500 pound gorilla, LivingSocial is no doubt giving them a run for their money, especially after receiving a huge (and by huge I mean $175 million) investment from Amazon. Also, don’t forget about Google; nobody sticks Google in a corner. Not long after they (reportedly) tried to buy Groupon for $6 billion dollars and Groupon (reportedly) said no, there is talk about Google creating a daily deals site to compete with Groupon called Google Offers.
Deal of the Day sites are quite popular and do not appear to be going away anytime soon. If anything, they will continue to grow and offer new opportunities for both consumers and retailers. Curious consumers should sign up to see what they’re all about. If the daily deals don’t interest you, simply opt out. At the same time, retailers ought to invest the time to learn more and determine if these sites are right for their business.
Online coupon sites have undoubtedly become a hot topic for 2011. Groupon and Living Social have been the most popular sites to date, but are now being challenged by new start-ups and potential monster competitors alike. On January 27th, it was reported that Google is creating a US-only daily deals service. This announcement (though details have yet to be disclosed–in true “Google fashion”) comes only a short time after Google’s failed acquisition of Groupon a month ago. Will this turn into a new online rivalry between Groupon and Google or will Google’s new service differentiate itself and create an entirely new market?
“Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers and vouchers program,” the Mountain View, CA-based company said in a statement. “This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways,” reports Direct Marketing News. So what do this venture and other online daily deal services mean for you?
For some companies, lack of human resources and infrastructure make it difficult to capitalize on such promotions. Like Oprah’s “O-factor“, companies are often bombarded with new customers demanding a specific product after it has been introduced by companies like Groupon. Without sufficient inventory or human capital to fulfill the orders, these promotions can actually backfire and have an adverse financial impact on business. To understand whether or not to try using an online coupon company, access our January Newsletter article, “Deal of the Day Sites–Is Groupon Right for You?”, by our EVP, Danielle Leitch. If you would like to tryout a promotion for your business, keep the following in mind:
Online deal sites have proven successful for many companies. Thinking through the process and proceeding with caution, however, is the best way to create an optimal brand and sales experience for your company.