KFit buys Groupon Singapore to continue its pivot to e-commerce
Subscription gym startup KFit has continued to morph into Groupon after it acquired the third country business from the group-buying giant in Southeast Asia.
Today it announced that Fave, KFit’s e-commerce offshoot, has acquired Groupon Singapore. KFit acquired Groupon Indonesia and Groupon Malaysia last year as part of a pivot to move from a business that sells fitness-based membership services to local e-commerce. KFit has raised over $15 million to date, including a $12 million Series A in January 2016.
There are plenty of links between the two. KFit CEO Joel Neoh started group-buying site GroupsMore in Malaysia which Groupon acquired within months of launch. Following the deal, Neoh then led Groupon’s operations in Asia before leaving to start KFit in 2015. Fellow KFit co-founder Yeoh Chen Chow was regional operations director for Groupon APAC, too.
A pivot isn’t unprecedented here given the tight margins at play. U.S.-based ClassPass, which pioneered the concept of subscription-based fitness for consumers, has undergone changes to make its business more sustainable, and it looks like KFit is going the same way. Indeed, in 2015 we reported that KFit’s burn rate reached the point that the company was almost out of money prior to its Series A round, so a change in focus isn’t a massive surprise.
Back in November, Neoh told TechCrunch the business was shifting to offline-to-online commerce — the process of helping the long tail of physical retailers to go online — mirroring trends that have eaten up billions of investment dollars in China, where the likes of Baidu, Alibaba and $18 billion-valued Meituan Dianping compete. Neoh said the future of the original KFit business would be up for discussion this year. But, with another deal completed, Fare is now represent in three countries which suggests that a full pivot is in operation here.
TechCrunch also understands from sources that KFit is in the process of rebranding to Fave, which would suggest its fitness business is currently living on borrowed time.
The irony at play here is that Groupon itself long gave up on Asia, shuttering its presence in a number of markets last year as the promise failed to deliver. The question is whether KFit/Fave’s founders have the know-how to make a difference where the U.S. company couldn’t.