Facebook, with its 500 million users in tow is about to cause an upset within the $10 billion daily deals industry. The purveyor of all things social is offering a free service called Facebook Deals that will allow merchants to send special offers to all Facebook users within their immediate area.
Facebook Deals expands on the already popular Facebook Places, the location feature that lets users inform their friends of where they are and what they’re doing. The deals service, which has been available in the states since November, just launched on Monday in Canada, Britain, France, Germany, Italy and Spain.
Facebook Mobile users can pull up a list of stores on their mobile phone or other mobile device. Stores marked with yellow tickets means they have a deal available. Then it’s just a matter of pressing “Check In” and showing the coupon image on the screen to the cashier.
“People are on Facebook every day asking for recommendations. What’s the best boutique in Montreal? Which company has the best cell phone coverage in Canada? For the first time, business can insert themselves in the conversation,” said Elmer Sotto, head of strategy for Facebook Canada. According to Sotto, more than 10 million Canadians check Facebook daily.
Facebook will be taking on some pretty heavy competition in the daily deals and online coupon market including Groupon and Foursquare but Facebook may prove to be a strong upset for any company now using the traditional daily deals model. Groupon and similar social buying sites retain as much as a 50 per cent cut of the sales made on any deal and according to a recent study from Rice University, less than 66 per cent of Groupon merchants make a profit through daily deals. On the other hand Facebook Deals is a completely free service.
According to Raymond Pirouz, lecturer of new media marketing at the University of Western Ontario’s Ivey School of Business, Facebook Deals is a dynamic coupon platform that will lower the value of Groupon’s service. Where Groupon only does one deal a day, Facebook may offer four or five. Pirouz also pointed out that Facebook is recognised and trusted by merchants worldwide and will have no difficulties in signing up top name companies.
During its first day of launch in Canada, Facebook Deals ranged from 10 per cent off clothing at Dynamite to 40 per cent off a book or toy from Chapters. Other participating companies included H&M, Joe Fresh, and AMC Theatres and in Britain, Starbucks offered free coffee to the first 30,000 customers to walk in using the Facebook Deals app. and there was a 20 per cent off deal at select dealers for a Mazda MZ.