A leaked embargo notice posted by the New York Times and picked up by TechCrunch is claiming that Facebook Deals is in the process of launching in the United States, a move that could be realized in all initial launch locations by Monday night.
The program which launched 3 months ago in Europe is seen as a direct competitor to Groupon, Living Social and Google Offers among other social buying platforms.
According to the report the program is first launching in Atlanta, Austin, Dallas, San Diego and San Francisco with other cities to follow in the near future.
Much like their competitors, Facebook will offer deep discounts to customers of their service, discounts provided by company’s around the country who want to sell their products quickly and introduce new users to their offerings.
While there is no certain future for Facebook Deals, the company does have some huge advantages against their competitors which in turn could signal major trouble for Groupon. For example, rumors are circulating that retailers may not have to pay for the service. Under current business models businesses must pay social buying sites a percentage of their sales in order to secure their services, however Facebook may decide to profit only when Facebook Credits are used to buy products, allowing retailers to keep more of their upfront profits when users pay with credit cards and other payment services outside of Facebook’s virtual currency.
According to the report, Facebook Credits will be allowed to be used as payment and let’s be honest for a moment, how many users who meant to buy “in-app” products are going to unload their virtual real world cash on a really cool deal they see on Facebook Deals before they buy that next Farmville add-on they were planning to grab. Impulse spending is the name of the game and with their Facebook Credits making a huge splash for the company Facebook can already tap into users who with a few simple clicks may be willing to buy products from their deals platform.
The Facebook Credit platform may also provide an added benefit. For example, a company may be willing to offer 45% off a product, however Facebook could offer to take a smaller percentage of their Facebook Credits cut on that offer, allowing for a 50% or higher cut in pricing. This type of Facebook control could lead to deals that even Groupon and LivingSocial can’t compete with.
The big advantage however is obvious, with over 600 million users Facebook can quickly provide their new products to users around the country while attaching their own name recognition to the product, while their own ad platform (the largest in the world) could help them promote deals to gain a wider audience very quickly.
Groupon, LivingSocial and various other social buying programs rely on word-of-mouth and social sharing to spread the word about their products and no one does social media better than Facebook.
What do you think about Facebook’s approach to the social buying sector?
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