Facebook to test ‘Groupon-inspired’ daily deals service

By Andrew Couts March 14, 2011

The mad dash to make money by helping customers save it continues this week with a Bloomberg report that Facebook will begin testing a “Groupon-inspired” daily deals service to users in select cities.

According to an official statement from Facebook, the online coupon offering will initially be available to Facebook users in San Francisco, San Diego, Dallas, Atlanta and Austin, Texas. The service will be an extension of Facebook’s Deals program, which allows businesses offer specials to their customers through the popular social network. Facebook staffers will help facilitate the service by highlighting deals for businesses to offer, and then promoting those deals on the site.

“Local businesses will be able to sign up to use this feature soon, and people will be able to find Deals in the coming weeks,” said Facebook in a statement.

As far as the collaborative coupon craze is concerned, Facebook is already late to the party. In addition to Groupon, which sparked the daily deals fire, we have copy-cats LivingSocial, AOL-owed Wow.com and Yahoo!’s Local Offers. Rushing down the pipeline are Microsoft’s deal-aggregator Bing Deals, and the growing Leviathan of the bunch, Google’s Offers. Even The New York Times has joined the hysteria with the newly-launched TimesLimited, which focuses primarily on customers who are rich enough to make their joining a coupon service seem like some sort of cruel, upper-crust joke on the rest of us.

While it may be true that Facebook, with its instant access to more than 500 million users worldwide, is perfect positioned to enter the foray of daily deals, it seems to us that this market is quickly ballooning into a fragile bubble that’s all-too ready to burst.

That said, there still seems to be some elasticity to this sector, so it makes sense for companies (and investors) to join in while the getting’s good. Unfortunately, it only stops making sense when a whole lot of people start losing a whole lot of money. So enjoy your 30-percent-off steak dinners while they last.

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Computing

Google Offers a Groupon clone

Google failed to offer Groupon a good enough deal for a buyout, but that isn't stopping the search giant from starting its own competing service. Google Offers will "is a new product to help potential customers and clientele find great deals in their area through a daily email," says a factsheet Mashable obtained. The new service will look and run similarly to other coupon sites like LivingSocial and Groupon. Basically, you sign up for it and Google will send you a daily email of big discounts in your area. The services run on the power of numbers. Local retailers and companies sign up and give huge discounts on items knowing that they'll get a giant boost in customers.

The difficult part of the job, unfortunately, is how much staff it takes to court small, local businesses around the country to participate. Groupon has a sizable sales staff of 2,000-3,000 that continues to expand as new cities and towns are added, cutting into potential profits for the company. Google already has the technical aspects in place (Google Checkout, etc), but to compete, it will have to add a similarly large sales team to court local companies.

Computing

Did Google buy Groupon for $2.5 billion over the weekend?

google over groupon

Back in September, Groupon CEO Andrew Mason and Google M&A lead Neeraj Arora had an intriguing back and forth on Twitter. The thread included a cryptic note about "hard" work from Mason, and a vague congratulations from Arora. This hardly seemed indicative of anything, until now, as rumors are wildly pointing to a Google-Groupon acquisition that has been in talks for some time.

VatorNews is reporting, based on an anonymous insider source, that the Mountain View company bought the daily deals site for $2.5 billion, which is significantly less than initial speculation concerning the buy out.

Computing

Google rumored to be in talks to buy out Groupon

It might be easier to just write about who hasn’t been trying to buy Groupon. Shortly after Yahoo announced its Local Offers feature, rumors that Google is looking to acquire Groupon have been circulating. Yahoo reportedly tried to buy out the daily coupon site for up to three billion, only to be turned down – meaning Google will try and make Groupon an offer it can't refuse. All Things Digital’s Kara Swisher claims that inside sources are certain Google will easily outbid Yahoo.

Google is, wisely, trying to make a better name for itself in the location-technology realm, and recently reformatted its Product Search engine, giving significantly more focus to local retailers in its search results. The browser has also added Hotpot to its local search arsenal to try to enhance its social presence as well. All good attempts, but let's be honest, Google needs something a bit more established in order to get committed users. Which it tried before: Google was interested in acquiring Yelp last year in order to flush out its local search, but negotiations fell through.