Did Facebook Just Out Groupon, Groupon?

After Groupon turned down Facebook’s $6+ billion offer, the obvious happened today. Facebook launched the new version of “Deals” which incorporates the local business advertising and coupon model that is Groupon’s cornerstone. This new offering brings me to a question that we get continuously. “Is Groupon the 800-pound gorilla in social commerce?” I think the more appropriate question is whether Groupon is really social commerce at all.

First of all, Groupon is undoubtedly the most prolific online local advertising service. While Groupon happens to include the obligatory social networking tools for sign up, sharing and the like, there is really no social aspect to Groupon in its current state. Clearly, its enormous member base gives Groupon the potential to become a social force in the future (should the company choose to do so), but it’s not today.

So let’s look at Facebook’s new “Deal” application. This is certainly a step in the right direction of social commerce. In the Deal view, I can see what my friends like, which does encourage me to consider transacting. And because I already know they like certain deals or establishments, I can begin interacting with them within Facebook and collectively decide if I want to buy it. Maybe my friends have already used or patronized the establishment, and I can get their opinion. Or maybe today’s deal is an activity, like the offer of Paddle boarding, that would be more fun with a group of friends.

If the question is “did Facebook just shoot one at the bow of Groupon,” the answer is yes. But even more importantly, and not surprisingly, Facebook is more about the social part of the social commerce where as Groupon is still focusing on the commerce part of the equation.

Facebook focuses on enticing the member by showing what their friends like. f-commerce (e-commerce on Facebook) is not new however. 1-800-Flowers launched the first store on Facebook almost two years ago followed by fashion companies like Levi’s (http://store.levi.com/#store/friends) and Diesel. What is surprising is that actual shopping and redemption is not conducted within Facebook, and there’s no consistent coupon approach like we’ve seen with Groupon. Each business I checked today has a different coupon redemption approach. This pales considerably to Groupon’s single account and redemption approach.

As I see it, Facebook Deals confirms that Groupon is not what I would consider truly social commerce—it’s merely brand positioning done well, and Facebook is not delivering the commerce experience necessary to really turn Deals into a transaction machine.

With Google Offers hot their heals…let the games begin and the buyer beware.