Not true - auction buyers have a network effect. More buyers ==> more sellers ==> more buyers. As someone who wants to occasionally buy something 'rare' or seco

Not true - auction buyers have a network effect. More buyers ==> more sellers ==> more buyers. As someone who wants to occasionally buy something 'rare' or second hand, I would go where the most sellers are when I want to find something! This itself causes a significant moat. Amazon has finally started chipping away at the sellers, by providing an even larger pool of proven buyers. Local deal sites are by defn focused on many independent local market. Their key promo channel is email to signed up users, since most people won't go to a website to look at deals everyday. What's the barrier to entry for another site - getting the same user signed up? There will certainly be consolidation, there will be two or three local deals sites left over. They will certainly not enjoy the margins GroupOn currently commands.