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Summary:

Facebook’s big bid to take on Groupon and other deal sites is coming to an end, at least for now. The company said in a statement to Reuters that it is killing Deals in the coming weeks after four months of testing.

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Facebook’s big bid to take on Groupon and other deal sites is coming to an end, at least for now. The company said in a statement to Reuters that it is killing Deals in the coming weeks after four months of testing.

“We think there is a lot of power in a social approach to driving people into local businesses,” Facebook said in the statement. “We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”

It’s an interesting turn of events considering how much interest went into Facebook’s offers effort. We talked about how the power of Facebook Deals because of how social it could be, as opposed to Groupon and Living Social. But it looks like the deals business is harder than we thought, especially if it’s not unique enough.

This would appear to be good for Groupon: As it prepares for its IPO, it’s now lost one big competitor. Facebook’s exit from the space might also favor incumbents who are already committed to the model and have those relationships with consumers and merchants. And it might underscore how much manpower is needed to make something like this work.

Or does this signal some more inherent weakness in the larger deals model? It’ll be interesting to get more reasons as to the decision. Facebook also pulled back on its check-ins and is closing its Places tab on Facebook mobile in favor of a broader tagging system that allows users to add location tags to any action.

It’s still early in the daily deals business and with a lot of questions swirling around Groupon’s IPO, we still don’t know how viable this will be over the long haul. But at least for now, there’s one less competitor in the game.

  1. This is precisely why I think FB will never become a true super power. The fact is, people only want to use FB to connect with their friends view photos. They aren’t there to consume ads. When you see an ad from Google it’s because you explicitly searched for it (or something related). When you see an add on FB, it’s just a random annoyance.

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  2. Interesting week for Facebook where they seem to more or less given up on 2 products (Places and deals) which to be honest I think is a good thing for them to have focus on their core product

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  3. These internet companies don’t understand basic salesmanship and customer service and that’s why they are losing in the commerce sector. ATTENTION GOOGLE: FORUMS ARE NOT CUSTOMER SERVICE!

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  4. Probably because nobody will even give them a credit card number… It might end up on someone’s wall, or worse. Trust is not part of their business model – you have to earn it, and ya can’t earn trust with facial recognition software running in the background. Estimations of their potential market cap are wet dreams at best.

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  5. Just My Opinion Monday, August 29, 2011

    Out of the two statements above:

    “This would appear to be good for Groupon”

    “Or does this signal some more inherent weakness in the larger deals model?”

    I think the latter is more likely. I don’t use Facebook, but I would think they would continue on with it if it looked profitable and promising, especially with the resources and user numbers that it has.

    When I saw this title my first thought was “That just lost Groupon (which I also do not use) quite a bit of money if it does have an IPO.

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