Social media: The emergence of social media based discount platforms

Coupons are no longer your grandmother’s domain. Over the past year, the market for online discount sites has grown exponentially. Sites such as Groupon, LivingSocial and Scoutmob offer users an opportunity to save, their business partners an opportunity to gain new customers and a tremendous value proposition to boot. While each site differs in its approach, the focus on crowd sourced savings remains a constant.

The flagship site Groupon requires a threshold of people to buy into the deal in order to unlock savings. In many U.S. and Canadian cities, Groupon offers discounts between 50 and 90% on a variety of goods and services. The model provides incentive for Groupon’s evangelists to engage friends and family in the effort to unlock their savings.

Scoutmob builds off of recent developments in mobile technology to access savings in proximity to a user’s location. In thirteen U.S. cities, a person can enter a store, whip out their mobile phone and show the store manager the discount which will then be applied to their purchase.

LevelUp caters to an elite crowd in Boston and Philadelphia using a “frequent-flier” model. The more deals a user takes advantage of, the more premium discounts they can access – enabling them to reach a “level up”.

 

Recognizing the enormous opportunity, bigger players such as Google and Facebook are entering onto the discount scene. Last year, Google offered a reported $6 billion to buy Groupon. While the takeover was unsuccessful, Google Offers is currently in the pilot phase for users and businesses in Portland, OR.

Facebook builds on its existing platform to engage users in a social discount experience. Facebook Deals caters to local businesses in Atlanta, Georgia, Austin and Dallas, Texas, as well as, San Diego and San Francisco, California. After purchasing their discount by credit card, PayPal or Facebook credits, a post is automatically created on their news feed to alert friends of the deal.

Facebook Deals generally offers discounts in the 13 to 75% off range. But according to Facebook representative, Emily White, the focus isn’t on big savings but rather on the opportunity for shared experiences. Facebook Deals differentiates itself by “find[ing] interesting experiences [for] you to do with friends.” Their value proposition is rooted in the social dividends of the coupons they offer and integration with the Facebook network.

 

Whether you explore the sites mentioned above or other discount options such as OpenTable, zozi, or viagogo, it seems clear that the desire for discounts is here to stay.