Facebook Deals Launches Tonight & GroupOn Doesn’t Stand a Chance

Facebook will unveil its group deals program tonight in 5 US cities according to an embargo-breaking slip-up by the New York Times tonight caught by TechCrunch. Facebook Deals launched 3 months ago in Europe. Tonight, according to reports, the feature will go live in Atlanta, Austin, Dallas, San Diego, and San Francisco. This, after learning from the early rocky roads traveled by competitors and Facebook’s own tests in Europe.

Comparisons to the mega-successful (if dreadfully boring) services GroupOn and Living Social are inevitable. But Facebook Deals is going to be much, much more interesting for everyone – especially for retailers who will offer deals. (Who likely won’t have to pay a cut of the revenue to this deals platform at all.) If Facebook can execute this feature well (and there’s no guarantee it can) then it’s hard to imagine what some of what are today’s fastest growing businesses on earth are going to be able to do to compete. Look at what Facebook Deals has to offer, below. GroupOn and Living Social are seriously at risk of being roadkill.

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1. It may be free for retailers: Existing Daily Deals services make their money by charging retailers a cut from every discounted transaction. At least in Europe, Facebook Deals offered deals for free. Free! The giant social network could scale like crazy doing that, and then make its money when people decide to make their purchases with Facebook Credits.
2. Facebook Credits: Tonight’s reports say you’ll be able to buy Deals with Facebook Credits! They will be the first real-world, non-virtual goods that will be available for purchase with this new currency. Kids are going to burn through this stuff like there’s no tomorrow. Load up with Credits with the intention of giving it to Zynga for Cityville crap and end up spending it at The Gap instead. Or vice-versa. When beloved national retailers start offering goods and lower prices to customers who pay with a new, virtual currency – that’s when said virtual currency becomes a force to reckon with. Somebody call Congress and the Federal Reserve – it’s time to start having some serious conversations.

3. Huge mobile app footprint: Facebook has some of the most widely downloaded mobile apps in the world. Hundreds of millions of people are already pulling it out of their pockets while they navigate around town, seeking to take photos, post quips, see updates, check-in to places. Boom – coupon. GroupOn has only begun to offer a mobile app and it’s nothing compared to Facebook Mobile.
4. Multi-purpose newsfeed: GroupOn and Living Social offer nothing but deals. Facebook puts deals in between pictures of your sister’s baby. Which do you think you’ll click through more often, all other things being equal?
5. Check-ins: Facebook probably has the biggest check-in network in the world. Simple as it is, millions of people publicly declare their locations to friends on Facebook already. Tie that in to Deals, as we heard last Fall when rumors emerged that some deals would be tied to checking-in to a place with multiple friends, and you’re so golden it’s ridiculous. “I was at the Starbucks in the mall with these 3 of my friends and we all got a coupon on a fappacino because I checked them in with me.” That’s a killer deals platform and judging from the Facebook Deals landing page pre-launch, that’s going to be key. Check-in, check your friends in, redeem a deal and boom – not only does the retailer get 3 customers, it gets word of mouth marketing across all their friends’ newsfeeds.
6. The Number One Killer Feature of Facebook Deals: Structured, verified, meaningful demographic and taste data. You think the retailers with whom you redeem a Facebook Deal aren’t going to be shown your favorite music, TV show, your education level, some level of details about your friends and much more – at least in aggregate? You’re kidding yourself. That info is gold and it’s going to be the real killer for Facebook Deals. Not just scale, not just the world’s greatest viral marketing platform – but valuable data about each and every customer that can then be used to retarget marketing efforts in the future. If Facebook can really deliver that well and at scale, it’s going to have a much, much more compelling platform for retailers than Pretending to Live Social or Grey Poupon. It’s going to be like your grocery store loyalty card, except it’s going to work across retailers and it will be filled with info as valid as you tell your Facebook friends.

Do GroupOn and Living Social even stand a chance? Probably not with their existing products, they don’t. Something’s going to have to change radically.

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