Ever-shrinking deal site Groupon has exited another market – this time selling its Malaysia business to KFit Group.
KFit, in which Groupon is an investor, had already acquired the Groupon Indonesia business.
“With our Indonesian business achieving nearly double growth since our acquisition, we are confident that the same growth principles will bring an exciting new local commerce offering to Malaysia,” said Joel Neoh, founder of KFit Group, announcing the deal.
The almost terminally flawed Groupon business model was founded in the US and was floated in late 2011 in one of the dot com industry’s most over-valued business IPOs in history. Since its float, Groupon has reported a loss almost every quarter. Last year, it attempted to streamline its business model across its various international markets, another strategy which failed to recuse the brand tainted by dodgy deals, dissatisfied customers and retail partners who lost small fortunes supplying unsustainable promotions sold online. Last month it was even caught selling counterfeit products in the UK.
As reported by Inside Retail Asia in September last year, the business closed its doors in Thailand, the Philippines and Taiwan. Outside Asia it had already exited Greece, Turkey, Panama, Morocco, Puerto Rico and Uruguay. Indonesia followed.
Last year, Groupon lost US$27.6 million on revenues which continued to fall.
In Indonesia, KFit retained the Groupon branding, but in Malaysia it will be rolled into its similar local concept Fave early next year, expanding that service into new categories such as restaurants, beauty, wellness, gyms, studios, hotels, holidays, leisure, entertainment and professional services.
One of the underlying failures of the Groupon model is to convert consumers buying deals into long-term loyal customers for the retailers which use the platform. Ellia Pikri of Vulcanpost.com says Fave seems to have learned from Groupon’s failure.
“Coded into Fave’s system are loyalty solutions and flexible offer structures utilising the tried-and-true model of offering deals to loyal customers that Groupon seemingly lacked before.
“Fave is also a mobile-first platform. It aims to provide a seamless experience for customers to find, share and enjoy a wide variety of special offers from local businesses, all while customers are able to easily experience what the app has to offer straight from their handheld devices.”
Pikri argues the mobile-first approach helps offer a clean and streamlined layout for users to browse on their handhelds. “Plus, reservations are made directly on the app, which cuts out the additional step of having to call a vendor (like via Groupon).”
Face has more than 3200 businesses on its customer database across three countries.
“While they do have some stiff competition, the combined expertise of Joel’s experience and Malaysia’s growth of online purchasing might just be the push Fave needs to see success where Groupon didn’t,” says Pikri.
Michel Piestun, president of APAC for Groupon, said it expected KFit Group would steer Groupon Malaysia “to even greater heights”.
“With Joel’s experience in leading Groupon Asia Pacific in the past, we are confident that KFit Group will be able to grow the business. As a strategic partner in KFit Group, we look forward to seeing the company take big strides in the coming months,” said Piestun.