Another Daily Deal Site in Trouble: Amazon's LivingSocial Bled $558 Million in 2011

by Knowlton Thomas | Startups

Most of the small daily deal startups seem to shutter after a few months, lost in an overly crowded market. Most of the big ones just seem to bleed massive amounts of money.

Groupon's biggest North American rival, LivingSocial, lost a whopping $558 million in 2011, according to Amazon's 10-K filing with the Securities and Exchange Commission. That's a big number, and even bigger when you consider that the company's annual revenue was only $245 million.

As the company gushes losses, it's also hiring like mad: the group buying startup added well over 4,000 employees last year. The bigger you are, the harder you fall.

The company claims to be in growth-mode, rapidly penetrating new markets and acquiring new customers. But consumer loyalty in the space is nil, as studies have proven, and merchants often get a raw deal. With the entire industry's sustainability under constant scrutiny, how long can these companies keep losing money before they call it quits? Or can someone actually innovate a business model where consumer, merchant, and daily deal site all win?

Vancouver, British Columbia, Canada, Inc. (NASDAQ:AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection., Inc., seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. and other... more

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes and author of Tempest Bound. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys hiking, tennis, and martial arts. more

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