No Deal for Facebook Deals

Posted in Blog | Comments Off on No Deal for Facebook Deals

No Deal for Facebook Deals

There is no stagnation at Facebook these days.  Facebook has been keeping busy by implementing changes to the privacy and sharing capabilities, many suspect in response to apparent meteoric success that Google+ has recently  shown the social media world, in allowing users to choose who to share with and how to follow.  Now Facebook has decided to kill its Deals offering  that was implement four months ago.  This, following their getting rid of their Places feature very recently.  Looks like Facebook is making the decision to back to the basics and focus on helping people communicate with friends, family, peers, etc.

Last Friday Reuters reported;

“After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks,” the company said on Friday in a statement emailed to Reuters.

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

Now for those of you playing at home, what can we gleam from this news.  Is this the “jump the shark” moment for the online deal websites and social sites?  Some are saying so.

“The Groupon group buying phenomenon is a commodity. There are no barriers to entry. It’s just not going to work because everybody offers it and therefore the margins go down,” said Jeremiah Owyang, a partner at research firm Altimeter Group.

 

There are many things that jump out in this statement.  First that Groupon is a phenomenon, which to many it in fact is.  But using that word implies a rarity as it is new and not universal, hence the rarity of a phenomenon.   However, commodity implies that it is commonplace, somewhat easily available and profits are based on future prospects of demand, therefore demand and supply can easily be calculated to determine or hedge against future prices.  Finally, “everybody offers it and therefore the margins go down,” well that obviously not the case given that Facebook just became the body that isn’t offering it.

 

I think the take away from this news is more than just one thing.  First, Facebook has hopefully realized that what they offer has value within itself and doesn’t need to add those things that don’t complement it’s core.

 

Second, group discounts aren’t going away soon, nor will they ever be so commonplace that everybody will offer it.  It only works for those who have a complimentary business model to offer large scale discounts as either a means of generating new clients or a quick boost in sales numbers.  This type of offering has been in existence longer that internet and Groupon, Living Social, etc. are just some of the companies that are providing a new means for businesses to offer discounts to customers.

 

Lastly, I don’t think this is even a jump the shark moment for discounts on the internet.  If anything, the internet is still a relative wild west of innovation and today’s hits become tomorrows fond memories.  How we interact and use this technology is constantly in a state of flux and improvement.   Groupon is at the relative top of the heap today, but who’s to say what will be the defacto leader for offering discounts.  Remember, you still get coupons in the mail and I don’t think businesses would still be doing that if it didn’t see some return.

 

What are your thoughts…. Do you think that online discounts are on their way out?  Is a business model that can be profitable?  What will be the next iteration of offering discounts virtually to customers?

 

Comments are closed.