A comparison of Groupon-esque social commerce offerings and potential threats to Groupon market share

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Social commerce is making huge waves in the world of online commerce, and the word on everyone’s tongue is Groupon, the ruler of a land where competition didn’t seem to exist.

That is until now. When Groupon turned down billions offered by Google to buy them, they stirred a hornets’ nest and now there are a myriad of these social commerce sites all pecking at the market share of Groupon.

What exactly is social commerce?
Social commerce is a form of e-commerce where the emphasis is on the use of social media platforms that promote social interaction and buying.

How does Groupon work?
Groupon, by promising businesses a minimum number of customers, get discounts you won’t find anywhere else. They call it “collective buying power” and this is the power that some companies are trying to steal from them. When you sign up you enter your city and your email address and from there you’ll receive emails advertising what deals are around in your area.  If not enough people sign up to buy a certain deal, then the deal will get cancelled.

The main social commerce contenders
The main contenders for the crown are Facebook Deals , Google Offers and LivingSocial.

OnlineMBA.com have created this great infographic that compares the main players, just click to enlarge:

  • Facebook Deals – Currently Facebook Deals is free for businesses to set up and they do not take a cut of the sales either. Using their Places platform, when you check-in, Deals will then show you nearby deals as well as appearing on the usual Facebook platform showing ads dependant on where you have said you are currently living. Currently available in Canada, France, Germany, Italy, Spain and the UK.
  • Google Offers – Currently in Beta testing in a few cities in the US. In a competitive market, Google has no USP to set them apart at the moment apart from their brand recognition and the possibilities of integration with their other services.
  • LivingSocial – An established social commerce platform that’s ramping up their marketing efforts and producing new innovative features such as their Instant Deals (similar to the Facebook deals phone app). Currently the biggest competitor for Groupon.

Whilst they all offer similar offerings as Groupon, the main difference will be how they market themselves and whether they can use their brand and reputation to steal market share from Groupon.

Whilst both Facebook and Google have only just started and are rolling out beta versions, they are offering these services for free to advertisers compared to GroupOn and LivingSocial taking a huge cut of 50-60% of any takings – this should really shake things up.

Groupon still control the arena in the UK, although LivingSocial is making steps to compete here they simply do not cover as main towns and cities as Groupon do. Whether LivingSocial can manage to catch up with the Groupon expansion before the Facebook and Google offerings enter the UK market remains to be seen. If they don’t expand now then LivingSocial could become ignored by the UK market.

The Facebook threat
With Facebook in particular the threat to Groupon is huge. Facebook’s DNA is purely social, their users are loyal and vast. If Facebook can quickly work out a model of engagement that works then it’s highly likely they could destroy the competition and if the advertising remains free then Groupon will seriously have to re-think their business model.

The future of social commerce
Groupon will have known for a while that even though they have a foothold in the social commerce arena that the potential threat from the bigger boys was always there ready to bear their ugly heads. If Groupon can manage to flexibly change its business model to adjust to the competiton the future could still prove fruitful for them, but the threats from Facebook, Google and LivingSocial are there, and their potential is huge, especially with Facebook.

Only time will tell who will prove the victor, we’re all excited here to see how it plays out.

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