

Looks Like Facebook Deals Is Being Unveiled Tonight.. - mvs
http://techcrunch.com/2011/04/25/facebook-deals-credits/

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biot
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.

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larrik
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!

~~~
Gaussian
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.

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getsat
Link to the cached NYTimes article:

[http://webcache.googleusercontent.com/search?sourceid=chrome...](http://webcache.googleusercontent.com/search?sourceid=chrome&ie=UTF-8&q=cache%3Abits.blogs.nytimes.com%2F2011%2F04%2F25%2Flatest-
rival-to-groupon-livingsocial-facebook-embargo-till-midnight%2F)

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larrik
"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.

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

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defen
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?

~~~
larrik
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

~~~
defen
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.

~~~
dougws
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.

~~~
SoftwareMaven
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-...](http://www.bloomberg.com/news/2011-03-17/groupon-is-said-to-discuss-
ipo-valuation-of-up-to-25-billion.html)

~~~
dougws
Those all make sense. Thanks!

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brlewis
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.

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

~~~
aaronbrethorst
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...](http://techcrunch.com/2011/04/18/groupon-acquires-whrrl-creator-
pelago/)

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27182818284
I wish the best for Groupon as watching Facebook snip at Google and vice versa
doesn't sound very fun.

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

~~~
larrik
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.

~~~
neworbit
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

