Facebook Deals Launches to Fight Groupon in 5 Cities

Facebook launches Deals on Facebook to challenge Groupon and LivingSocial in the growing social commerce market. Facebook is looking to differentiate by selling group deals.

Facebook April 25 flipped the switch on its Deals on Facebook service, pitching local deals to its users living in Atlanta; Austin, Texas; Dallas; San Diego; and San Francisco to grab some of the success Groupon and LivingSocial are enjoying.

Groupon and LivingSocial ignited the local deals market by offering consumers deals of 50 percent off or more from merchants in their specified neighborhood. Both have managed to earn hundreds of millions of dollars in e-commerce sales.

While those deals are targeted at individuals, Facebook is going for a more social bent on deals, which it lets consumers pay for via credit card and, eventually, Facebook Credits virtual currency.

Facebook has partnered with several local deal providers to integrate their discounts on the social network. These partners include aDealio, Gilt City, HomeRun, kgb deals, OpenTable, Plum District, PopSugar City, ReachLocal, Tippr, viagogo and zozi.

"We've worked with partners and local businesses to help deliver the best social activities in your area," explained Emily White, Facebook's director of local. "And once you've found a deal you like, having the deal on Facebook makes it easy to share, buy and plan with your friends."

For example, eWEEK just received two Facebook deals: one for hiking and wine tasting and one for family horseback riding lessons.

Unlike a recent Groupon deal eWEEK received for half off flowers from a local florist, these Facebook deals are geared for group outings. Clearly, Facebook wants users to engage in social activities.

Deals on Facebook come via email, as they do from Groupon and LivingSocial. Facebook has also created a Deals tab for Facebook homepages, putting the daily discounts front and center for users who live in Atlanta, Austin, Dallas, San Diego and San Francisco.

In addition, users can see the deals friends buy or like in their News Feed. Search Engine Land provides a nice screenshot walk-through of the service.

Deals on Facebook comes five months after the company dipped a toe in the local deals waters with Facebook Deals, which it has now renamed Check-in Deals in light of its broader offering.

Like Foursquare, Gowalla and others before it, Check-in Deals surfaced on users' iPhone and Android smartphones when they checked into local restaurants and retailers. The word is that Check-in Deals didn't prove popular.

Most industry watchers agree that Deals on Facebook will be a greater success story, providing a formidable opponent to Groupon and LivingSocial, particularly when the service launches across the country and when the company creates a mobile Deals application.

Facebook has 600 million-plus social network users, providing a massive network of potential e-commerce customers for which the company can surface daily deals in users' email inboxes, homepages and News Feeds.

Deals on Facebook comes days after Google Offers became available in Portland, with an expansion to San Francisco, New York City and Oakland, Calif., coming soon.