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Once Again, Big Companies Often Fail When Jumping Into A Space With A Smaller Competitor

from the deals-deals-deals dept

Mon, Aug 29th 2011 7:57pm — Mike Masnick

The success (or, at least, the tremendous usage) of Groupon has driven a ton of competition into the market. Though, as we've noted in the past, many of the upstart competitors seem to be cargo cult copyists -- copying the superficial idea, without really understanding what makes Groupon so dominant in the space. The latest competitor who thought it was easy to copy and discovered otherwise appears to be Facebook, who is shutting down its daily deals business after just four short months.

Of course, back when it launched, many people wondered if Facebook would be a "Groupon killer," given its larger user base. This is yet another reminder that, contrary to what some people will claim, it's often not that easy for big players to just come in and copy an idea and take over the market. It happens sometimes, certainly, but it's a lot rarer than you think. It's why I'm always amused at people who worry that some big company is just going to "copy" their idea and wipe them out. If a company really understands an idea and a market deeply, it will quickly discover that a superficial copycat won't have much momentum... which appears to be exactly what happened with Facebook's deals offering. Big companies don't always win. In fact, it's a lot less common than some people will insist.

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Filed Under: big companies, copying
Companies: facebook, groupon

26 Comments

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Anonymous Coward, 29 Aug 2011 @ 8:16pm

Or maybe they realized it was a worthless business
Just sayin'...
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Loki, 29 Aug 2011 @ 8:43pm

I think the problem is that many of the bigger companies have really lost touch with their customer base and fail to understand their wants/needs. I know a LOT of people on Facebook, and of all the things I've heard people say they wished for, a coupon service was not something I'd ever heard mentioned.
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Anonymous Coward, 29 Aug 2011 @ 9:01pm

Groupon should just sue Facebook for potential lost revenues since they are copying their business without their permission.
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Anonymous Coward, 29 Aug 2011 @ 9:15pm

I get more of a feeling that Facebook came to understand the reality of the groupon model:

http://www.forbes.com/sites/brendancoffey/2011/06/02/think-groupon-makes-money-think-again /

If the biggest dog in the yard ain't making it, the rest of you are wasting you time.

Further, I think that Facebook realizes that this sort of thing dilutes their brand. A bad deal through their service could end up costing them not only a coupon buyer, but also the social actions of that user.

Don't be shocked if they let another company come in to do the same sort of thing, without Facebook's true involvement or risk in it.
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Old Man in The Sea, 29 Aug 2011 @ 9:41pm

Why sue when it is good advertising
Hey folks, Company X likes our idea so much that they want to copy us. We are the first and the best.

or such other examples
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Eugene (profile), 29 Aug 2011 @ 10:16pm

Re:
That's part of why I think allowing terrible companies like Zynga to exist on Facebook was a smart move. Once you're able to get over that first difficult hurdle of getting your userbase to disassociate your brand from the services offered by 3rd parties operating inside your brand, you're basically in the clear to offer a wide range of 3rd party services with higher stakes involved, without fear of being held responsible if they fail.
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indy, 29 Aug 2011 @ 10:24pm

They left the market
Because it is way way too small of a market for Facebook and it doesn't scale. I don't know many people that stuck with groupon after getting a month of spam in their mailbox unrelevant to their needs.
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Anonymous Coward, 30 Aug 2011 @ 12:14am

This is yet another reminder that, contrary to what some people will claim, it's often not that easy for big players to just come in and copy an idea and take over the market. It happens sometimes, certainly, but it's a lot rarer than you think.

Is this your opinion or is this based on any studies?
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Reality Zero, 30 Aug 2011 @ 3:30am

Reality?
Actually, the big company usually just buys the little one and ruins the service for everyone who uses it.
Ain't competition grand?
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IronM@sk, 30 Aug 2011 @ 3:55am

Re: Why sue when it is good advertising
Sarcasm detector fail.
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Allen Harkleroad (profile), 30 Aug 2011 @ 4:16am

hey,
The work competitor in the headline is spelled incorrectly. ;-)
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TriZz (profile), 30 Aug 2011 @ 5:14am

Instagram
Facebook is giving up Places (Foursquare competitor) and Deals (Groupon competitor) and is now going after Instagram with plans to add filters to your photos on FB.

Instagram was all in a tizzy last night with lots of #IGaintFB posts. Apparently, for a good part of the summer, FB was trying to purchase Instagram. When that didn't happen, they just decided to copy it.

...and I'm not the least bit worried. See, Foursquare, Twitter and Groupon are all still around. This will be gone after a few months.
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out_of_the_blue, 30 Aug 2011 @ 5:43am

So don't worry about giant corporations, eh?
IF this attitude had been regarded as legal 30 years ago then the world would be at the mercy IBM, AT&T, and a few others. You've a complete fantasy world based on current regulated, relatively fair and open markets, and you simply don't understand the long struggle to take control away from giant corporations. NOW is NOT a "natural market", it's been tuned to /artificial/ fairness, and you ALL want that.

Once again, Mike plants a poison pill: "big doesn't always win, ignore the big guys, they're incompetent".

The only trust Mike will bust is yours if you follow his pro-corporate line.
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Anonymous Coward, 30 Aug 2011 @ 6:31am

You mean groupon isn't the biggest scamming site in the world???
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Anonymous Coward, 30 Aug 2011 @ 6:37am

Re:
Yes they are.
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Anonymous Coward, 30 Aug 2011 @ 6:38am

Re:
Hey, the word work is spelled incorrectly. ;-)
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Adam, 30 Aug 2011 @ 7:08am

This is yet another reminder that, contrary to what some people will claim, it's often not that easy for big players to just come in and copy an idea and take over the market. It happens sometimes, certainly, but it's a lot rarer than you think. It's why I'm always amused at people who worry that some big company is just going to "copy" their idea and wipe them out. If a company really understands an idea and a market deeply, it will quickly discover that a superficial copycat won't have much momentum...

When innovators worry about some big company just copying their idea, it's been my experience that it's because they really don't understand in depth why their idea works.
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Robert Doyle (profile), 30 Aug 2011 @ 7:17am

They don't always win
They don't always win but they sure can afford to fail a lot more often.

It makes me appreciate new and interesting ideas all the more. I think it takes a lot of guts to be an entrepreneur (I sure hope I spelled that right...)
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Anonymous Coward, 30 Aug 2011 @ 7:30am

Re:
And constant security and privacy issues are not listed in the what-people-wants list either. Nor is having your face blindly tagged and exposed to the world because you dared walk your dog last night and someone snapped a picture of you. Or to be spammed like hell by "friends".

Facebook == the new Myspace. It's for attention whores. Period. The non-attention whores mostly all have inactive account and are either thinking of closing their accounts or already have. Sorry fanboys, the truth hurts. The world worked fine without it and will move on fine once it self-destructs. I just hope all these fails will precipitate things.
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Anonymous Coward, 30 Aug 2011 @ 7:31am

Re: They don't always win
I think you got it wrong. Money != guts.
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Anonymous Coward, 30 Aug 2011 @ 8:41am

Hmmmm... does anyone still use Google+ instead of Facebook?
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Ari Blackthorne, 30 Aug 2011 @ 11:47am

Can you say "iPad versus ALL OTHER COMERS"?

The concept you describe is true in more or less every aspect of public-facing business.
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ltlw0lf (profile), 30 Aug 2011 @ 12:18pm

Re: Re:
The world worked fine without it and will move on fine once it self-destructs.

You forgot "You damn kids, get off my lawn." And it helps to shake your cane at them too.

Sorry dude. The world moves on and curmudgeons like you slip away. If Facebook collapses, there will be someone else jumping in to take over just like Facebook took over for MySpace.
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Anonymous Coward, 30 Aug 2011 @ 1:21pm

Re: Re:
Can't stand Groupon, myself, but every single one of the examples listed in your articles were from businesses that used the service without fully understanding what they were doing, or capitalizing on what they were doing. Groupon brought them customers:fact. They didn't take advantage of this: fact. They like to whine: fact.

Those articles are more a warning to companies to figure out a marketing strategy WELL BEFORE you sign up for a popular service like Groupon.
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Anonymous Coward, 30 Aug 2011 @ 1:23pm

Re:
Never considered using either. Why?
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Harvey, 1 Dec 2012 @ 6:16pm

Daily Deal Aggregator
I think daily deal websites are not too far off evolving in to something else. The market is becoming too saturated, where we now have to have daily deal aggregators helping to pull the deals in to one place. These DDA's are often frowned upon but I believe offer the best solution to allowing these deal sites to expand. Being in Australia one I cam across recently is http://www.nobigdeal.com.au It seems to have a nice amount of 'Human' touch rather than being totally automated and has a nice fresh lay out.
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