Currently, the main dichotomy in the world of geo-social commerce is between deals services and check-in companies. This split has, thus far, proven a smashing success for powerhouses like Groupon and quirky pioneers such as Foursquare. They ask users to either be reactive purchasers laying in wait for the next killer discount, or active participants broadcasting their whereabouts.
One major gripe about daily deals services, however, is that their deep discounts and revenue split ultimately make the offers a bad deal for participating businesses. And with the check-in services, others suggest that customers have grown weary of the whole phenomenon of broadcasting their place — or simply don’t care about the gaming thread that runs through it.
Several new players have sprung up with different twists by marrying social and commercial needs with location: Zaarly and Localmind are a couple of the latest — not to mention a certain notable company with over 600 million members that just announced plans to get in the game.
One Chicago-based entrepreneur has his own thoughts on the paradigm and is expressing them by ginning up a competing service — one that doesn’t take a cut of the retailers’ action. In the shadow of Groupon (also Windy City-based), George Tung has unveiled the freshly minted Tabblr (I know, another missing-vowel site) in an effort to find a better profit balance for local merchants who are trying to draw in potential consumers. The site is a platform where mobile users can quickly find out what’s going on around them, and its back-end allows small business owners to initiate and manage their own promotions and daily deals.
“Sites like Groupon and LivingSocial do a good job of promoting the ‘deal of the day,’ however [local] businesses are taking a big risk by selling deals,” claims Tung, who serves as Tabblr’s CEO.
“Majority of the businesses are selling deals at a loss,” he has said in written materials describing the service. “For example a deal would be offered at $20 dollars for $40 dollars worth of food, service or product. Out of the $20 dollars collected, $10 dollars is given to Groupon or LivingSocial.” (Actually LivingSocial’s model is a bit different and with both, deals are sometimes negotiable; Street Fight reached out to Groupon for comment but did not hear back.) “The idea is to take a loss on the deals sold to attract new customers and hope that people who come in will purchase over the necessary minimum. Unfortunately there have been many business owners who came out and said that their ‘daily deal’ has ruined their business.”
Tung says a lot of the people buying these deals are repeat customers and many of them have “disciplined” themselves to buy only the required minimum to use the deal. He also contends a known phenomenon is at play here that drives business owners crazy: “Once customers get used to deals, they tend to only come back when deals are offered,” he said. “Even when businesses grab new customers, many of them tend to be one-timers.”
We want to make it completely insane for any business to ignore signing up with Tabblr. Tabblr is extremely simple to use, completely free…
If you’re going to take shots you ought to be ready to back them up with facts or a better product. Right now, Tung is focusing on the product. So what exactly is it?
“Tabblr is different because there is no profit-sharing, period,” says Tung, who works alongside co-founder and CTO Milos Golubovic, a Microsoft development technologies pro. (The two worked together before on YouPlayorWePay, a novel but very controversial “insurance” program for players of World of Warcraft.) The service also targets the broadly defined “activities” rather than deals. “It allows [brick and mortar] businesses to draw in customers and keep whatever they sell. Tabblr provides an easy to use platform for businesses to create and manage their own deals and places no restriction on the type of deal offered.”
The tools allow businesses the option to end or edit a deal at any time if they feel they need to. Tung says there is “limitless flexibility” to the time and location of scheduled promotions, and businesses will be able to tune it to whatever works out best for them and their customers.
And then, I suppose, the plan is to party like it’s 1999.The company will not take a cut of anything the businesses draw. In fact the plan is to operate as a free service to both merchants and users. Yep, free: Like Groupon Stores without cost or limits. To boot, they are focusing first on growing the product and user base, with hopes of drawing VC attention (they are self-funding).
Currently Tabblr is Web-only and essentially in beta (my word) with about six activity partners; an Android app will be available before the end of the month and an iPhone version following the first half of May. The two are focusing on Chicago as they try to hone the product before looking at New York, Boston and Silicon Valley.
With the mobile apps, customers will be able to see an activity, “put it on their tab,” take it to the venue and show the clerk their phone to receive the deal. Those tabblr’d while on the desktop are in the cloud so they’ll appear instantly on the phone when logged in.
“We firmly believe that many of the businesses featured on ‘daily deal’ sites can drive in nearly the same amount of traffic if they only promoted the same deal on their own,” said Tung. “Using my $20 example above, businesses are essentially selling a food service or products at a 75% discount. Let’s take a pizza chain for example, and see what the math would equate to: If that pizza chain were to suddenly slash their pizza’s price from $12 down to $3 and the price of slices from $3 to $.75, think about how that would affect their sales. Just the word of mouth advertising would be pretty insane.”
So really, what’s the revenue plan? Tung said it includes things such as premium upgrades to help businesses, like analytics and special activity postings. They’re still under development so nothing anytime soon.
Regarding other location-based apps like Foursquare and Yelp, Tung says their primary focus is to find locations around you. Both companies implemented a gaming aspect for users which requires check-ins at the locations to become Mayor or Duke. Businesses can choose to use the check-ins to assign deals for the users to redeem.
“Tabblr does not do check-ins,” he says. “Tabblr was not made to appeal to the gamers but rather people who want to find something to do.”