There is a lot of money riding on the daily deals phenomenon. Consumers are able to take advantage of special discounts offered through the service based upon bulk sales. Businesses get large spikes in their business by making the offers. The biggest challenges facing the phenomenon are two-fold: investing and consumer fatigue.
On the investment front, the two leaders in the industry are heading in different directions. Groupon's early IPO success is turning sour of late. On the other side, LivingSocial is looking to exceed their initial expectation of a $200 million round of funding. Big bucks are flying around these and other daily deals sites.
Consumer fatigue is the other challenge. That's where Frugalo comes in. Started in June by ex-Digg.com employees Michael Cieri and Scott Reynolds, the service officially launched this week. The daily deals dashboard wants to be the central hub for shoppers to consolidate their deal hunting and reduce the barrage of notifications they receive from all of the sites.
"We realized that our inboxes were clogged every day with offers on products and services, many of which they didn't care about," said Cieri. "We knew we could do a better job at helping consumers tame the mayhem of limited-time offers."
The service has three primary functions:
- It acts as a single point through which consumers can see all of the deals available to them from the various shopping sites on which they participate.
- The algorithm learns about the consumer based on past purchases, geography, and peer recommendations.
- Friends can share their purchases with each other (and the rest of the world if they'd like) and see what each other is buying on the sites, adding the social element that has, in many ways, been missing from Daily Deals.
In essence, Frugalo simplifies the way that daily deal enthusiasts manage their shopping. It will bring new consumers into the daily deals mix by amplifying purchases to a wider audience through social media. This will bring more businesses to the table. Groupon, Living Social, and the other sites will view Frugalo as an advocate for their businesses.
If Frugalo and similar services can bring sanity to daily deals and if the major players are able to make their business models sustainable, the phenomenon could continue indefinitely. The concept is strong. If investors concerns can be abated and consumer fatigue can be relieved, we should be hunting for our next great spa experience or 57% off piano lessons well into the future.