Ellen Gibson, AP Retail Writer
What happens when you cross the world's largest social network with one of the hottest business models in e-commerce? Facebook wants to find out.
Facebook is launching a deals program Tuesday in five U.S. cities, following on the popularity of Groupon and other services that offer deep discounts — for example: $50 worth of food at a local eatery for $25.
By allowing small businesses to leverage the Internet while helping consumers score great deals, these group-couponing services have become some of the fastest-growing businesses in the world.
Facebook now wants a part of that. It hopes to exploit its existing networks of friends and family when it begins testing offers in San Diego, San Francisco, Atlanta, Dallas and Austin, Texas.
Many deals sites have a social component. For instance, if you get three friends to buy a LivingSocial voucher, yours is free. Groupon's offers become valid only after a certain number of people purchase them.
But the deals are circulated to users through email, and the community aspect is secondary.
Facebook is hoping to change that.
"We're building a product that is social from the ground up," says Emily White, director of local for Facebook. "All of these deals are things you want to do with friends, so no teeth whitening, but yes to river rafting."
Starting Tuesday, when Facebook users in the five test markets log into the site, they will see a deals insignia at the bottom of the page.
Clicking on it brings up a list of currently available offers. A user can buy one, click the "like" button to recommend it to others or share the offer with friends through Facebook's private messaging system. When users purchase or "like" a deal, it shows up in their friends' news feed.
That means "the discovery of the product can happen in lots of different places," White says.
To get the program started, Facebook has enlisted 11 companies that already supply deals elsewhere. Restaurant reservation service OpenTable will broadcast offers for local eateries, while online ticket seller Viagogo will market events.