Wednesday, March 23, 2011

Facebook vs Groupon and LivingSocial

I wanted to talk about what I think is going to happen over the next little bit with Facebook entering the ring on the social commerce arena.  Who do we think will survive?  LivingSocial?  Groupon? Facebook?  How do we think facebook will impact the endemic guys LivingSocial & Groupon?

So first I want to think about how these business models work.    From what I understand they have call centers that work on getting deals in from local suppliers.  Without deals you can't get people to respond to them.   2ndly they need to focus on getting eyeballs.   You need people to see the deals in order to create the first action of someone within the social network responding to the deal.

So lets think about that.   If someone has eyeballs (facebook) can't they negotiate around the other suppliers because they have a lower acquisition cost?

Ruh roh for LivingSocial and Groupon in my opinion.   Lets see how this one plays out.  The one who has the smartest and cheapest eyeballs wins this battle.  time will tell.

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