Madison Reed has raised $32.1 million since launching 15 months ago.
The social network hopes to leverage its news feed for the discounts.
Facebook Deals will launch in the next few weeks in Austin, TX, Atlanta, Dallas, San Diego and San Francisco, says Emily White, Facebook’s director of local.
To encourage what it calls social discovery—that is, one consumer learning about something via Facebook’s newsfeed, the first page a consumer sees when logging on to Facebook.com—Facebook will highlight in the news feed if a consumer clicks that he is interested in purchasing a deal, as well as if he bought a deal.
Enabling consumers to express interest on Facebook before actually making a purchase is important because Deals will focus on social experiences that a consumer is much more likely to do with friends than on his own. That could include a discount for a tasting menu at a restaurant or tickets to a concert. “The fact that every step of the process—from interacting with the deal, booking the deal and experiencing the deal—is tied to friends makes it more likely that you’ll have a positive experience with the business and revisit it again,” says White.
That’s why Facebook believes merchants taking part in its deals will attract different customers than those attracted to competing online daily-deal sites. “Digital couponing has taken off because it can deliver the one thing that businesses want—customers in a very quick, direct manner,” she says. “But the problem that has developed is that the customers these deals attract are people who aren’t likely to become loyal to that business because many come once and never come back.”
Facebook’s approach can create a better experience for both the business and the consumer, says White.
“Let’s say you there’s a concert you want to see,” she says. “In your newsfeed you see your friend bought a deal for the concert on Facebook. You can send her a message or post on her wall that you’d like to go, too. You go together and then you share those memories on Facebook together. You’re much more likely to have a positive association with that deal than you would if you were doing it alone.”
Shoppers will be able to buy daily-deal vouchers sourced via Facebook, as well as from nine other retailers that will offer a mixture of deals they promote on their own e-commerce sites and Facebook-exclusive offers. Those sites are Gilt Groupe’s Gilt City, Home Run, OpenTable, Pop Sugar City, KGB Deals, Plum District, Tippr, Reach Local and Zozi.
When a consumer buys an offer sourced from one of the other sites, Facebook will make that clear during the buying process, says White.
Facebook will use its own back-end payments system to handle Deals, and consumers will be able to pay for Deals using Facebook Credits as well as other payment methods that the social network did not detail. “We want to make the payment process as easy and simple as possible,” she says.
When a consumer purchases a deal sourced from one of the other retailers participating in the program, Facebook will not provide the name of the consumer who bought the voucher to the other merchant. If the consumer has a problem with the deal, Facebook will handle the customer service process, says White. “We’re being very cautious when it comes to privacy,” she says.
To avoid confusion, Facebook has rebranded its other Deals program as Check-In Deals. That program uses a feature within Facebook’s mobile app to enable businesses to offer deals to consumers who check in through Facebook Places.