Now the social media leader has decided to scrap its Deals offering. This comes on the heels of their Places feature getting the boot as well. It looks like Facebook has decided to go back to its roots and try to help people communicate better with friends, family etc.
Reuters reported last Friday
“After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks,” the company said on Friday in a statement emailed to Reuters.
“We think there is a lot of power in a social approach to driving people into local businesses,” Facebook added in the statement. “We’ve learned a lot from our test and we’ll continue to evaluate how to best serve local businesses.”
So we can now read a lot into this or just take it for what it is. If you are the “let’s over-react and say something outrageous” type then this is surely the harbinger of the death of the deals space. You can say that and some influencers are wondering whether the deal space as a whole can hold water.
“The Groupon group buying phenomenon is a commodity. There are no barriers to entry. It’s just not going to work because everybody offers it and therefore the margins go down,” said Jeremiah Owyang, a partner at research firm Altimeter Group.
Look, everyone is wondering whether this coupon on steroids approach to discounting is going to work. I suspect there is a place for it. As for the current condition of the market? It’s simply the work of Groupon hyping itself up so that it can have a stellar IPO and continue their Ponzi scheme like pattern of getting new investors to fill the cash void and pay off the other investors until ultimately it is likely that someone (as in investors in the public Groupon) will be left holding the bag. It’s obvious they aren’t making money and they may never make any but the cult of Andrew Mason continues to slog on. Go figure.
Right now, it doesn’t appear as if this kind of model can scale to the way that Groupon is doing it without inventing new accounting schemes etc and that can’t be an indicator of good health as a business. Does that mean the deal space goes away completely? I doubt it but the deal mentality is more of a consumer mindset as opposed to a business model.
Now that people are getting used to the idea that some merchants are willing to drop their drawers to get people in the doors it has become less of a novelty and more of a way to gauge how serious or how good a business really is. Since that shift has taken hold (and rather quickly) the space, in terms of aggregation of these fire sales, is getting less appealing for sure.
As for Facebook? They are still providing their check-in deals offering but it doesn’t appear to be a real winner as of now either.
In the end we may just discover that this utopian crossroads of social and commerce isn’t what it was hyped up to be, at least not in the current day and age. It will evolve and change but this all could simply be another case of the Internet industry setting unrealistic expectations then hyping those expectations to a shrill level then standing around with the hands on theirs hips wondering how things didn’t pan out like anticipated yet again.
Talk about a model that is getting old quickly.