Groupon Malaysia

SEOUL—Ticket Monster Co., South Korea's largest online deals company by market share, said Tuesday it would acquire Malaysia's Integrated Methods Sdn. Bhd., in the first step of what executives said would be a rapid expansion across Asia.

Both belong to a fast-rising niche of Internet commerce that offers group consumer discounts and that includes the likes of Groupon Inc. of the U.S. The sector has attracted a lot of start-up firms and capital but is already starting to consolidate.

Daniel Shin, Ticket Monster's chief executive, says he believes that the company's rapid development in South Korea—from $18,000 revenue in May last year to more than $20 million this May—means that it has jumped into the top five of what are known as social commerce firms globally.

The industry is led by two U.S. companies, Groupon and Living Social Inc., that have a strong footprint there. But it is far from settled elsewhere. Ticket Monster has about a 50% share of South Korea's social commerce market, according to the company. Groupon entered the market in March and reached a 9% share in May.

On Monday, Chinese discounter Wowo Group Ltd. said it expects to soon raise $200 million in private investment and is aiming for an initial public offering on the Nasdaq Stock Market in the U.S. later this year, as the company invests to fuel growth in the face of tough competition. Groupon this year teamed up with local Internet company Tencent Holdings Ltd. and another investor to launch a social-commerce site in China, Gaopeng.com. In total, there are about 3,500 Groupon-type "group-buying" websites in China, according to Beijing research firm Analysys International.

Mr. Shin said Asia is a natural place for Ticket Monster to grow. The company, which South Koreans simply call TMon, hopes to make acquisitions or open up branch operations in Singapore, Vietnam, the Philippines and Japan within a year.

"We kind of accidentally found ourselves into the top five" on the strength of South Korea alone, Mr. Shin said. "We thought we not only could expand in Asia, we should."

TMon has raised $11 million in venture capital in two rounds over the past year and expects to soon close a third round that will be several times larger than its current funding, the company said. Mr. Shin said the company keeps its books prepared for an initial public offering but considers it one of several options for raising capital and hasn't made a specific decision about it.

With its acquisition of Integrated Methods, Malaysia's largest online discount company by sales, Ticket Monster will take control of Everyday.com.my, which offers both daily deals and other forms of e-commerce. The site aims for revenue of $12 million this year, Ticket Monster said.

Ticket Monster was started a year ago by Mr. Shin, a 25-year-old Korean-American, and four other young Koreans who initially followed the discount shopping model of Groupon and other firms, offering on its web site a daily deal at a small restaurant or merchant usually at 50% off regular pricing. TMon takes about 15% to 20% commission from each transaction. The company has also developed event and travel services aimed at young South Koreans.

The company is now working on a location-based service called TMon Now that will allow merchants in real time to offer deals to nearby, smartphone-equipped shoppers, Mr. Shin said. Merchants would be able to offer less-discounted deals since customers would be closer to them and likely be more willing to stop in, Mr. Shin said.

He said the company tapped an unmet need among South Korean small- and mid-sized businesses for a way to advertise. The country's newspaper and broadcasting industries are dominated by companies with national reach that rely heavily on a small base of large advertisers. With few small-sized newspapers and broadcasters, small and mid-sized businesses chiefly use printed fliers, signage and word of mouth for marketing.

"When I did my first couple of sales pitches to restaurants, I would ask them how they thought about getting the word out there. They said, `We're going to wait,'" Mr. Shin said. "What they're waiting for is word of mouth to build. Sometimes that takes years."