Facebook Deals has been scrapped after launching four months ago, Bloomberg learnt this morning. This has led critics to question the viability of the service.
The social networking giant teamed up with eleven other group deal sites, such as Gilt City, ReachLocal and Zozi, offering promotions in five cities in North America. However opinion is divided on whether the test was a success.
Annie Ta, of Facebook, remains confident of their performance but states its decision to end the Deals feature in the coming weeks. This will not stop its aim to continue to drive “people to local businesses”.
"We remain committed to building products to help local businesses connect with people, like Ads, Pages, Sponsored Stories, and Check-in Deals,” she added.
Vinicius Vacanti, co-founder of daily deals aggregator Yipit.com, is less convinced of Facebook’s performance.
"I don't believe this means daily deals are not a viable business," said Vacanti. "It more suggests that large media and tech companies can't just 'turn on' daily deals and expect them to work." Vacanti also pointed out that industry revenue in North American cities fell by 7% month on month in July.
Concerns are also voiced about the longevity of successful deal companies like Groupon., with the market becoming more saturated. The lack of barriers on entry suggests that the margins will go down once everyone offers the same.
Even so insights provider BIA/Kelsey, claims that the current revenue of the daily deals market stands at $1.2bn and is predicted to rise to $3.9bn in 2015.
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