Rocket Internet gets unit boost as coupon startup makes profit

BERLIN: Rocket Internet SE-backed e-commerce coupon business Global Savings Group became profitable for the first time, a boon for the Berlin-based startup factory that’s been under pressure to prove it can turn its units into money-making machines.

Global Savings, about 40% owned by Rocket, said its gross merchandise value, a measure for sales it generates for retailers, about doubled to 463 million euros (US$546mil) in 2016, helping it earn a profit.

The Munich-based company, which declined to give exact profit numbers, expected to grow “significantly” this year, managing director Andreas Fruth said.

“We expect to be profitable on a group level in 2017 as well,” Fruth said by phone. The company is open to buying competitors to strengthen its position in existing markets or expand into new ones, he said.

Global Savings links shoppers with free coupons and discounts for about 20,000 online retailers such as Amazon.com Inc, Zalando SE and Asos Plc.

It gets a fee of 5% to 15% of the value of a shopper’s purchase.

Last year, the startup partnered with the Daily Mail tabloid to bring its service into the UK. In France, it started the Holiday Detective site that collects travel deals.

Rocket, which recently backed a successful initial public offering of Delivery Hero AG, has vowed to make three of its biggest startups profitable by the end of the year.

Global Savings, which is active in more than 20 countries including Germany, India and Malaysia, competes with the likes of RetailMeNot and CouponDunia.

Global Savings and its rivals are rushing to build scale as e-commerce increasingly replaces brick-and-mortar shops in many retail sectors. The company’s investors also include Deutsche Telekom AG and Holtzbrinck Ventures. — Bloomberg