Facebook Deals Launches in Five Cities

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Starting today, Facebook Deals will begin kicking off in five cities, according to the New York Times. The hotly anticipated Facebook Deals taps into the social online coupon market along with heavyweights Groupon and LivingSocial in offering discounts for shared activities.

The feature will initially only be offered in five cities: Atlanta, Austin, Dallas, San Diego and San Francisco. Facebook plans to test out it in there before it rolls Deals out to other cities around the nation.

Facebook users can begin receiving Deals through email or NewsFeed. Last month, users who wanted to opt in to the email service could subscribe to the service. In addition to presenting local offerings, users will also have the chance to comment on individual deals. The discounts will focus primarily on local activities and local businesses.

Facebook Deals will be the first among the major companies to truly integrate social networking with the online couponing business. Deals can be shared with friends, and users will be able see what their friends have bought. In addition, you’ll be able to view what kind of deals your friends are interested in – making it ideal for group outings, concerts and events. Want to head out to that SXSW festival together next year? You’ll be able to easily organize who’s coming on Facebook.

The deals can be purchased by way of Facebook Credits or through a credit card. Credits already can be used to buy some virtual goods inside the social networking site, but it’s the first time the service can be used to purchase vouchers for cold, hard goods. According to the New York Times, Facebook has high hopes that its Credits system will become a major force in the world of online payments.

The company hopes that it will distinguish itself from its competitors because Deals taps straight into the social network Facebook users themselves have already built up. That’s instant access to 600 million and counting users. It is a major disadvantage for competitors like Groupon and LivingSocial, which are built around the idea of buying shared deals but do not present an easy way to organize it:

…Groupon and LivingSocial could both theoretically survive just fine without any of the “social” aspects. They’re localized daily deals sites with the ability to share deals and, in LivingSocial’s case, feature what amounts to an affiliate program. Take the “social” out of sites like Facebook and Twitter, though, and everything falls apart.

Meaning if, somehow, Facebook can actually pull this venture off well, Groupon and LivingSocial will have some serious issues to contend with. The biggest factor will revolve around what kind of vouchers Facebook can offer to its users. ReadWriteWeb speculates that the deal may be free for retailers to participate, which would certainly entice more partnerships.

The Palo Alto-based company says that it plans on using its own team to find local businesses that are interested in offering deals. They also plan to collaborate with other deal services like OpenTable, PopSugar City, and Zozi.

(via New York Times)

More on TIME.com:

Social Shopping Is Big Business, but What’s So ‘Social’ About It?

Facebook Deals: Forever Alone No More

Facebook To Test Out Social Buying Service