Facebook’s Secret Deals Weapon

Facebook Deals is an attempt by the social networking giant to elbow its way into the deals space dominated by Groupon and LivingSocial. It brings a unique asset to the table that could give it a leg up: the news feed.

Unlike the two incumbents in the space, Facebook has 600 million users glued to their stream of updates. That means it can email its deals, but also get additional distribution thanks to deals sharing through the feed. This could become critical since Facebook Deals is premised on the social aspect. Facebook has said it will look for deals best done with friends to better fit its social networking bent.

Facebook’s social hooks might not give it a significant advantage. Twitter tried and failed at the deals space with its ill-fated @earlybird service last year.

Facebook also faces the task of filling a deals pipeline. It will attempt to sell the deals itself through a sales force, a huge task for scaling the service. Facebook Deals has launched in just five test cities. Without a huge sales footprint that has an in with local merchants, Facebook could be left to offer deals on a wide geographic area — or it might rely on national merchants, such as its check-in promotion with Gap. It is also buttressing its own deals with those from partners.

One other advantage Facebook is bringing to the table is its virtual currency. Users can buy the coupons using Facebook Credits, the system Facebook set up mostly to service social gamers. It remains to be seen whether this takes friction out of the purchasing process.