counterpoint: trademe.co.nz - started up in 1999 and pretty much owned the NZ auction space because eBay didn't have a presence there at the time. Sold for 3/4 billion NZ$ in 2006.

Being a big fish in a small pond can be profitable - these days, its Groupon clones setting up outside the US. I think this stands a higher than average chance of working - simply because the model does require direct interaction with businesses, and therefore local operators are going to have an advantage in terms of cultural/local knowledge.

If you're lucky to win your local market, you'll probably end up getting acquired by Groupon itself.