Facebook’s zero margin groupon feature

Can I just start by saying holy crap Facebook has been launching a lot of stuff lately.  HOLY CRAP!

I have been meaning to write this for a couple weeks but I wanted to chat about Facebook Deals and should put tremendous pressure on Deal of The Day (DOTD) services.

This system has the potential to solve user’s discovery of new businesses, consolidation of coupons, small business digital loyalty programs or customer service and DoTD technology for anybody.  All that stuff is great but the trick that they are doing it for free.

Facebook is building it for their users and the advertising dollars that will follow.  If this is a 1.0 version of Deals and you know that with any traction it will be improved so that it has most of the mechanics that Groupon has.  With a 500M user reach it is hard to imagine that it won’t have a ripple effect on the industry and sales dollars.

It is well documented that Groupon takes a huge revenue cut directly from the merchant purchases which can’t do well for repeat business.  Living Social is putting pressure on Groupon and this cranks up the heat to white hot.  You can argue that Groupon has the distribution reach but again FB has 250M daily active users and 500M total.  In addition Yelp has the same check-in and DOTD technology with their user base 32M and a FB instant personalization integration.  Groupon has been lauded as the biggest, baddest and most profitable company in tech but this could be a game changer and let’s see how long the emperor keeps those clothes on.

Let me repeat what others have already said, “Check-in and DOTD are features and if you company doesn’t add more value then you better sell it quick.”

PS.  The other big deal for the offline world is that location aware or check-in functionality closes the loop on offline Analytics.  Jerremy Stoppelman basically quoted this last week at Web 2.0 but that is a another rich topic and post.

PPS.  They launched Yelp Check-in deals yesterday as well, 10X the FourSquare users and plenty of badges.  Like I said should have posted last week.


About svmoneyball

A lifelong student of silicon valley. I also tend to play a lot of Ultimate Frisbee.
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