Daily deals remain on a tear as innovation adds spice to the sector.

First there were deal sites like Scoopon and Cudo. Then came the deal aggregators like AllTheDeals and BargainDesk. Now here is a deal aggregator with a local twist – a la BargainDesk meets Foursquare, if you will.

DealFetch calls itself Australia’s first location-based group buying aggregator, and might justifiably be so. The startup’s Sydney-based co-founders, Stas Belkov and Adam Mikulasev, have been running a beta version of DealFetch.com.au since late April and now offer the service in five cities – Sydney, Melbourne, Brisbane, Perth, and Adelaide – and a number of their suburbs.

Belkov says he and his partner hit upon the idea after concluding that location and integration would be a “natural progression” for “the group buying industry.”

“Group buying is in essence about promoting local businesses, which, of course, have a physical location. We believe this must be taken into account in the aggregation process. By doing this, consumers can receive deals that are better targeted to them, easing the effect of deal fatigue,” he said in an e-mail interview with Anthill.

Like most innovative startups, DealFetch solves two distinct problems users face. One, an unmanageable barrage of daily emails from several different group deal providers; and two, deals not tailored to a user’s location, rendering waste many of the bargains – both for consumers as well as sellers.

“There are now well over 20 group buying sites in Sydney alone, consumers can no longer keep up with the barrage of daily emails from these services,” says Belkov.

“I think localisation is the future of group buying, together with niche operators that are able to specialise in one category of deals, and do it well.”

Last month, research firm Telsyte said the Australian group buying market would exceed $400 million this year, reflecting a growth of over 200 percent. In the second quarter, revenues grew to $123.9 million, from $71.8 million in the first quarter. The fastest growing deals were in the “leisure and recreation” and “other products and services” category.

To tap this market, DealFetch promises to deliver what all its competitors do and more with just one email a day, tailored to a user’s location.

It aggregates deals from the 10 largest group buying providers such as Cudo, LivingSocial, Stardeals and Scoopon, sorts them by category and adds geo-location data to every deal before sending out the listings. Users can sign up for personalised emails based on their interests and location. DealFetch also has integrated restaurant and hotel ratings into its deal listings.

What lies ahead

What are the challenges DealFetch faces?

“The primary challenge in this business is user acquisition,” says Belkov. “There is a large battle for user acquisition going on between both the group deal providers, and the deal aggregators. Everyone wants a massive email list to market deals to, and the cost of acquiring a user is always going up.”

Consequently, DealFetch is finding “innovative and cost effective ways” to acquire users, and keep them. This includes a mixed strategy of paid and unpaid search engine marketing, as well as a superior user experience that helps retain users, says Belkov, who previously worked as a search engine marketer at HotelsCombined.com.

The startup also faces technological challenges.

“Our software is custom written and requires constant monitoring to ensure that deals are indexed correctly,” Belkov says. “Combining restaurant and hotel reviews, as well as indexing merchant locations also present tough technical challenges. There is no common data format among deal providers that can give us all the information we need, therefore we need to constantly innovate to maintain accurate data and a quality service.”

DealFetch’s founder says the firm is experiencing solid levels of growth, and is working to increase its rate of expansion. “We also aim to perfect our deal listings and emails to the highest standard in the market. We believe we are well on track to achieving these goals in the next three months,” Belkov says.