Dive summary:
- Rumors are circulating and the second largest daily deal firm, LivingSocial, may be sold or liquidated off in pieces by 2014 due to under performance.
- The daily deals market is increasingly saturated, especially with additions from big firms like American Express and Bank of America, and the model of daily deal sites like Groupon and LivingSocial are struggling with low margins.
- LivingSocial was forced to dismiss 400 employees last year after a Q3 loss of $560 million.
From the article:
"Forrester Research analyst Sucharita Mulpuru-Kodali says neither LivingSocial nor Groupon are too big to fail—even if the latter still has cash reserves in the billions from its 2011 initial public offering. 'The daily deals space is saturated,' she says, 'and it never provided tremendous value to merchants. And that was the fundamental flaw in the business model. They've survived over the last few years even when these truths were obvious because they’ve reduced the margins they ask of merchants, they extend the length of offers and they make more offers available at any time.'"
