Facebook just revealed that it’s testing a new feature called “Buy with Friends” for its site, which will allow users to share their deals on virtual goods — and I’m starting to wonder whether Facebook could bring something similar to non-virtual deals.
Commerce product marketing manager Deb Liu described the feature on-stage today at the Inside Social Apps InFocus conference in San Francisco. (I’m at the conference, but I was busy writing about other news, so for this story I’m relying on the coverage from Forbes and All Things Digital.) The idea is to let users tell their friends about virtual goods purchases that they’ve made in Facebook games. Most interestingly, if a user unlocks a deal, they might be able to share it with their friends.
Facebook has constantly worked to find the right balance in allowing developers to promote themselves in users’ newsfeeds without users feeling that they’re being spammed. (Chief technology officer said earlier today that Facebook has reduced spam by 95 percent. in the past year.). Buy With Friends offers a possible solution to that problem, because a message about a random Facebook game will probably seem much less annoying when it actually benefits you, say if it tells you, “Your friend has unlocked this deal for you — get 40 percent off this special monster food.”
More than 50 percent of users in the test program elected to share their purchases, Liu said.
Again, this is all about virtual goods for now, but it might carry over nicely into the Deals product that Facebook announced last November. Right now, businesses can offer different kinds of deals as a reward for check ins on Facebook Places. What if you could then share those deals with your friends? For example, you might win a discounted pair of jeans if you check in to Levi’s often enough, then you could offer your friends a similar discount. It would be a way for Facebook to compete with popular group-buying site Groupon in a way that doesn’t just copy Groupon’s features.
COMMENTARY:
Facebook will generate more than $1 billion in sales from virtual goods this year, and approach $2 billion next year. Facebook had introduced Facebook Credits as a enabler of online transactions. Currently, there are more than 200 games and applications from 75 developers that accept Facebook Credits for those virtual goods, including 22 of the 25 most popular social games. Facebook credits can buy virtual goods from more than 200 applications on the Facebook platform, like special crop seeds or enhanced tractors in the otherwise free-to-play social game FarmVille. Credits have now moved into the physical world as well. Recently, Safeway Stores joined Target, Best Buy and Walmart in selling Facebook Credit gift cards, just in time for them to become a stocking stuffer for the onrushing holiday shopping season. Facebook is ramping up its repertoire of services which accept Facebook credits and features the following currently
VentureBeat's Anthony Ha's comments comparing Facebook's new "Buy With Friends" buying feature with Groupon's group buying model are is worth looking into. If I were Google I would combine both virtual and real world purchasing capabilities into the new feature. Why have two. This is an over-simplification, of course, but you could connect a separate module to process real world purchases, and those would automatically be messaged to a Facebook's member's friends.
Groupon commands a nearly 80% share of the group buying market, and with its new $377 million funding, and aggressive international expansion plans, will give them a good lead before Facebook enters the group buying market, if at all.
My main concerns is whether group buying is sustainable over the long run, for various reasons that I have detailed in my previous blog posts. Many experts believe that group buying has already entered a "Bubble" stage. Still, you cannot argue against success, but 2011 will be a crucial year for group buying. LocalSocial, #2 behind Groupon, is partnering with Amazon.com, and they have nearly doubled their traffic in a week. LocoalSocial also raised $140 million venture capital, so it could become a real threat to Groupon.
Courtesy of an article dated January 25, 2011 appearing in VentureBeat's SocialBeat
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