Looks Like Facebook Deals Is Being Unveiled Tonight.. | Hacker News Reader

Looks Like Facebook Deals Is Being Unveiled Tonight..

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23 pointsmvs23 comments

I think this is a genius move for them. Groupon tries to be a social coupon type of place but they don't actually have a social network to back them up. If you and three friends want to take up that skydiving offer, you need to coordinate outside of Groupon, agree upon it, and then everyone trusts that the others made the purchase.

Now imagine doing this on Facebook where you could potentially (no idea if they have this functionality planned, but they should) purchase the skydiving offer with a provision such as "only settle the charge on my credit card when three of my friends also sign up". It would get posted to your wall as "John Smith signed up for skydiving at 50% off and needs 3 more people to join him". Then Jane Doe also signs up and your wall now reads "John and Jane are going skydiving and they need 2 more people to join them". If Facebook did that, it could be huge.

Additionally, Facebook credits cost 30% commission to the vendor. Groupon charges 50% commission for their deals. Assuming that the commission structure for Facebook Deals uses the same percentage and there isn't an additional fee on top, it's more financially appealing for merchants to sign up with Facebook over Groupon. To match it, Groupon would need to cut their revenue by 40%. That'll be a tough pill to swallow.

So we have Facebook, the top internet social company, getting into the top internet social advertising fad.

Then we have Google, the top internet advertising company, getting into the top internet social advertising fad.

So if the question was: "is the Groupon stuff more social, or advertising?" It would seem we have the perfect way to find out!

This is getting more than interesting. Out of the new entrants, I have to give the edge to Facebook. Assuming all of these companies can put together sales forces capable of finding good deals and vendors--but getting a corps of 2,000, like Groupon's, can't be all that easy--the whole revenue equation boils down to subscribers. More subs = more sales. The edge there has to go to Facebook, who, I would expect, will be able to weave something quite clever into their UI to allow and encourage people to shoot these deals out to their entire friend network. Their subs list could get massive quickly.

Link to the cached NYTimes article:

http://webcache.googleusercontent.com/search?sourceid=chrome...

"You mention that Emily White says Deals will be the first product that uses Credits for real goods (rather than virtual ones in games). You can’t use Credits to directly buy real goods. You can use Credits to buy Deals, and you get a voucher that you can print out and take to the merchant to redeem your deal. But you can’t use Credits to actually buy a real good. Might be confusing to some people."

Um, what?

Perhaps they are trying to avoid the Secret Service (ie, avoiding the idea that it is a currency)?

Still, what a hilariously confusing paragraph.

For fun, try replacing "real good" with "drugs." It works about as well!

I'm surprised to see Atlanta, Dallas, and San Diego ahead of LA, New York, and Chicago on the initial city list. Any thoughts on why they chose those cities?

I can think of a $25 billion* reason not choose Chicago to test in...

In all seriousness, if you actually wanted to have test markets, I can't imagine including LA, NY or Chicago with a straight face.

*potential IPO, at least

Funny, point taken about Chicago. I guess I wasn't thinking about the fact that these are test markets, which is indeed a good reason not to start with the biggest cities.

I still don't get it. Why not have a big city as a test market? It seems like the more potential customers there are, the more likely it is to catch on.

EDIT: Serious question, by the way. I assume from the exchange above that there is an answer, I just don't know what it is.

Reasons not to choose the biggest cities:

1. More traffic than you think you can handle.

2. Demographics don't match the mainstream that you will be selling to later.

3. Competition already has a lock on those cities.

I'm sure there are others as well.

Edit: the Chicago/$25 billion comments refer to Groupon's HQ being in Chicago (and their Potenial IPO valuation[1]).

[1] http://www.bloomberg.com/news/2011-03-17/groupon-is-said-to-...

Those all make sense. Thanks!

The focus on concerts and events may also be due to tickets providing more opportunities to catch fraud later, after a transaction has taken place. FB credits are faster/more convenient than Paypal, probably by virtue of doing fewer checks before the transaction goes through.

How long before Groupon launches a social network or a search engine?

Well, they bought Pelago last week...and then announced that Pelago's social network, Whrrl, is being shut down at the end of the month.

http://techcrunch.com/2011/04/18/groupon-acquires-whrrl-crea...

I wish the best for Groupon as watching Facebook snip at Google and vice versa doesn't sound very fun.

Facebook on the path to being like Yahoo, doing everything...Yahoo tried to do everything, they failed terribly, is Facebook ship beginning to sink?

I mean, Google tries to do everything too, and while they're certainly not always successful, they're certainly doing really well and turning huge profits.

But Google still hasn't proven whether they will be able to be profitable it ad sales tank. Of course, the fact that that haven't had to prove it implies the rest of the business is supporting the ad business at least reasonably well. Only time can truly answer that one.

I had the exact same thought with Google's announcement.

On the other hand, the problem's been that Yahoo wasn't actually the best anything. Casual web? AOL. Search? Anyone else, then Google. Email? Copied Hotmail, then GMail came along and they never really caught up. They purchased a bunch of top-notch companies and then let them stall into obscurity.

So, perhaps the comparison isn't going to hold up. Still, these companies should be warned.

I thought yahoo email was pretty good, and yahoo finance is probably still the best of the choices out there. But totally agree that a lot of things went to Y to die

As another comment said however, this kind of thing is right in Facebook's wheelhouse.

Social can drive group activity (my wife planned her HS class reunion mainly through FB), especially group sales.

This could be Facebook's big "monetizing" event that breaks them out of the hype area and squarely into heavy profits.

This isn't Facebook doing "everything", this is Facebook capitalizing on precisely their greatest asset: customer data.

No one is in a better position than Facebook to facilitate group buying. The synergy-meter has burst into flames.

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