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Facebook on Tuesday started offering users in five U.S. cities daily shopping deals, becoming the latest competitor to enter an already "crowded market" dominated by Groupon and LivingSocial. Facebook is betting its popularity and its role in connecting people will help it create "a more compelling service than rivals," says Miguel Helft in The New York Times. Instead of focusing on items like discounted clothing, Facebook Deals with be geared toward travel, concerts, wine tastings, and other activities friends can do together. Does Facebook's program — now available in Atlanta, Austin, Dallas, San Diego, and San Francisco — have what it takes to be a Groupon-killer?
Yes, Facebook's social approach makes sense: It's smart for Facebook to emphasize social experiences rather than just compete to offer the deepest discounts, says E.B. Boyd in Fast Company. Businesses can't keep cutting their prices to attract new customers, so many daily deal services will soon "start to crumble." Focusing on things friends can do together "fits with Facebook's core mission and core strength."
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Yes, because Facebook has what retailers want: Facebook's biggest edge is the vast collection of "structured, verified, meaningful demographic and taste data" it can share with marketers, says Marshall Kirkpatrick at ReadWriteWeb. That information can be used to perfect sales pitches, something retailers will love. Plus, Deals will create "real-world, non-virtual" uses for Facebook's online currency called Credits. "Somebody call Congress and the Federal Reserve," because Credits are about to become a real force.
No, Groupon still has an edge: Facebook is going to kill Groupon? Sorry, "I'm not buying it," says Larry Dignan at ZDNet. Groupon has a solid head start, and its successful business model isn't as easy to replicate as people think. Facebook may be bigger, but it "doesn't have the focus on coupons or local business relationships" to knock off Groupon or LivingSocial. And social network addicts might find coupons, or commerce in general, "annoying in the context of Facebook."
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