Places, Deals and Groupon part 3

On Tuesday, Facebook announced (very quietly) it was killing off its Places feature. Today they shared they were killing off Facebook Deals. Though the announcments may not be directly related, I have to think part of Facebook’s Places strategy was to offer special Facebook Deals based on check-ins. Note: Facebook will still enable you to identify your location, but through the regular post functionality.

Facebook Places is/was the service that allowed you to check in to a venue using the Facebook app on your mobile phone. Facebook Deals is a coupon like service allowing you to purchase special offers, in a lot of ways it’s similar to Groupon and Google Offers.

Facebook’s departure from the deals market is an indicator of one of two things  1) best-of-breed products and services will really win over market power and audience size in the end, or 2) The online, heavy discount group couponing model is flawed.

If you’ve read recent posts from the Harvard Business Review and Bloomberg, I think you’ll figure out which it is.

If you look at Groupon’s recent announcement about its profitibaility, you can decipher that it’s customer acquisition costs are extremely high.

I’d hazard to guess that very few retailers are return customers. Especially when it seems so many retailers are led into programs that they can’t service or support. Yes, this may be their own fault for entering in a promoition that they can’t support. But, how successful can Groupon or a Facebook Deals be if at the end of the day they don’t help their customers develop deals that are good for all involved?

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