Daily Deal sites, such as Groupon and LivingSocial, may be in for a rough road after a recent report stated that 798 daily deal sites shut down during the second half of 2011, according to a report by Venture Beat.
Related: Groupon’s Business Model: Bubble or the Real Deal?
Analysts have openly wondered whether the “daily deal” business model is sustainable and it has not been for many. The report underlines the volatility of the position these sites have in the market, particularly in Asia.
As for the good news, Europe and Latin America saw gains in daily deal sites during 2011 with 235 and 324 new additions, respectively.
The report also notes that the volatility could be in relation to Groupon’s domination in the sphere, with over 150 markets in the U.S. and more than 100 in Europe, Asia and South America.
Groupon went public in November at an IPO price of $20 per share, which became $30 per share the first day of trading. However, the stock has since settled back down to around $21 per share. LivingSocial just recently closed a massive $176 million funding round and may look to go public later this year.
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