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I suspect that Living Social may not be around in five years. I read that it lost $580 million last year. I buy vouchers from them all the time for restaurants and vacations.

But I thought about it further. The Living Social business model may not be viable long term. I booked a vacation with them. The guy from the travel agency said his company was losing money by running the deal, but hoped to get repeat business. He hoped people would come back and buy vacation packages from his agency at full price.

Here is the problem, though. If I want to go on another trip I'll just wait for a Living Social deal unless that first company was downright excellent beyond my wildest dreams. I'll go to a different agency that is running a deal. I'll go to a different restaurant running a deal.

From the perspective of the business running the deals I'm not sure the economics are there for them to come ahead through advertising at Living Social. I'm not sure they'll get enough repeat business to justify the expense of losing money through Living Social promotions.

by Rain17 on Jun 14, 2012 7:34 pm • link • report

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