![[단독] Against Coupang rocket ships… E-Mart, Naver Ride](https://file.mk.co.kr/meet/neds/2021/03/image_readtop_2021_226271_16152837334567278.jpg "[단독] Against Coupang rocket ships… E-Mart, Naver Ride")
Naver and E-Mart are stepping up to strengthen their online shopping business through an alliance. According to the investment banking (IB) industry and the distribution industry on the 9th, Naver and E-Mart plan to exchange shares worth 250 billion won by signing an agreement next week as soon as possible. At present, an agreement has been reached on a large scale, and final negotiations are underway on the details. Using the strengths of both companies, Naver and E-Mart will also cooperate to solidify the No. 1 place against Coupang, which is currently prominent in the Internet shopping field. It is an analysis of the so-called’ban-coupang solidarity’ movement.
The two companies are also planning to introduce a delivery system using SSG.com operated by E-Mart and collaborate with CJ Logistics, which Naver has already exchanged shares of. E-Mart has been growing every year since the launch of SSG.com, but its market share is still weak along with the growth of Coupang. SSG.com’s transaction volume last year was 3,923.6 billion won, accounting for only about 2.5% of the total amount of Internet shopping last year (161 trillion won). Through this stake exchange, E-Mart is expected to take advantage of the Naver platform and expand its business boldly by combining information technology (IT) power and database (DB).
Naver is also expanding its business in connection with offline through E-Mart, the strongest in distribution in the offline tradition. Fresh food and same-day delivery items can also be expanded.
Naver Shopping recorded 16.6% of the Internet shopping market as of last year. It leads Coupang, which is 13%, by a slight margin, but if Coupang is listed on the NASDAQ market on the 11th, it can aggressively expand its business, making it impossible to guarantee the No. 1 Mercury. In addition, eBay Korea, which has a market share of 12.4%, is also expected to change its perception of the industry as it recently sold.
Naver announced at the’Naver Service Meetup’ event on the 2nd that during a meeting with Shinsegae Group Vice Chairman Jeong Yong-jin who recently visited Naver’s office building, he talked openly about the distribution sector and where cooperation is possible. Cooperation between the two companies has been in a hurry since Vice Chairman Chung’s visit to Naver. Naver is considering various logistics methods because users want fast delivery, but they want premium products to be delivered, or fresh foods that are delivered on the same day can be quickly and freshly delivered to the cold chain.
[이동인 기자 / 김태성 기자 / 강인선 기자]
Against Coupang rocket ships… Distribution dinosaur E-Mart on Naver platform
Exchange of shares of Naver E-Mart
E-Mart, the strongest in offline distribution
Combining IT technology and big data
Aiming to expand the’customized shopping’ business
Equity exchange with Naver
CJ Logistics logistics system utilization
Delivery from product order’one-stop’
The’opportunity’ chosen by Shinsegae Group Vice Chairman Jeong Yong-jin, who emphasized in the 2021 New Year’s address “This year, when crisis and opportunity exist, must be planted with winning DNA,” was revealed as an alliance with Naver. The industry sees the combination of the No. 1 discount store (E-Mart) and the No. 1 e-commerce (Naver) as the core of a joint venture between domestic online and offline retailers, while paying attention to the impact it will bring to the future market. According to the distribution and information technology (IT) industry on the 9th, as Naver and E-Mart decided to exchange stakes worth 250 billion won as early as next week, interest is drawing on the substance of the solidarity that will materialize in the future.
The industry believes that Naver has partnered with E-Mart among many online and offline distribution companies because it has paid attention to the strengths of E-Mart, which is not elsewhere. That is, it is possible to implement online and offline commerce strategies using solid offline stores.
Currently, the number of shipments per day at SSG.com, an integrated online mall of E-Mart, is about 130,000. Of these, 80,000 cases are handled by NE.O, an online distribution center such as Gimpo and Yongin, and the remaining 50,000 cases are handled by PP centers installed in 110 E-Mart offline stores nationwide. Neo is in charge of early morning delivery, which is delivered the next morning if Neo orders the night before, and E-Mart stores digest about 40% of the total online delivery volume with the existing offline infrastructure through the dual strategy of delivering the same day.
This is noted as a strategy that can utilize the brand power of’E-Mart’ in offline distribution, especially in the discount store market. E-Mart started as Korea’s first hypermarket (Changdong branch in 1993) and has maintained the No. 1 position in the market for over 30 years in both the number of stores (currently 141) and sales despite numerous ups and downs. In particular, maintaining stable both the quantity and quality of fresh foods such as vegetables and fruits thanks to the solid supply chain and purchasing know-how accumulated based on offline stores is a strength that other online-based e-commerce companies cannot easily replicate.
Despite the fact that due to the spread of Corona 19 last year, there was not a lot of disruption in delivery of daily necessities in some e-commerce services, the reason that stable product supply and demand at E-Mart and SSG.com was possible is due to an online strategy that combines online and offline. E-Mart plans to renew its E-Mart store again this year and increase the number of delivery centers to more than 10 PP centers to increase the delivery volume to 140,000 cases per day.
The transaction amount of SSG.com including offline store delivery last year, which enjoyed the special Corona 19, increased 37% from the previous year. Thanks to this, E-Mart’s consolidated sales (22.33 trillion won) last year exceeded 20 trillion won for the first time in history, despite the fact that the entire retail industry suffered a downturn due to Corona 19. In particular, discount store E-Mart continued to grow by 1.7% compared to the previous year despite no artificial closures.
From the perspective of E-Mart, this partnership was driven by the view that collaboration with Naver Shopping, the strongest player in the online shopping field, is essential to upgrade e-commerce capabilities to the next level. In particular, as Naver has strengths in both artificial intelligence (AI) and big data, which are essential elements for the advancement of e-commerce business, it is expected to further strengthen this through solidarity with Naver.
In fact, since last year, E-Mart has been putting its life and death to reinforce technological capabilities in the field of e-commerce such as AI through recruitment of outsiders. Representatively, in an executive’s greeting in October last year, Kang Hee-seok, CEO of E-Mart, also served as the representative of SSG.com, which operates the entire integrated online mall of Shinsegae Group. Following this, he is concentrating on planting IT DNA in the company by successively recruiting the brains of the information and communication industry. In fact, he recruited former SK Telecom Mobility Business Manager Jang Yoo-Sung as SSG.com Data and Infrastructure Headquarters, and Jin Yo-han, former SK Telecom Digital Transformation (DT) Head of the E-Mart Digital Business Headquarters. By attracting talented individuals, it began to improve the efficiency of personalized shopping and delivery, and to advance automated chatbot services. Some services have already been commercialized. SSG.com is using AI machine learning technology for inventory management in distribution centers. It analyzes customer order data, predicts product demand up to a week from now, and automatically orders and fills 90% of the products received at the center accordingly.
As E-Mart establishes a cooperative relationship with Naver, there is also a possibility that the cooperative relationship will continue to CJ Logistics, which had previously exchanged shares with Naver. This is because distribution dinosaurs and logistics dinosaurs gather around Naver, creating a synergy effect of expanding product groups and distribution networks.
Previously, Naver decided to link the full-filment service provided by CJ Logistics with its open market service, Smart Store. Fullfilment is a service that handles logistics from online product order to delivery. It is expected that the establishment of a 24-hour same-day delivery system while linking smart store sellers with CJ Logistics’ logistics network will lead to improved customer satisfaction. For Naver, which does not have its own delivery network, it became an opportunity to increase its capabilities in the open market market by expanding the logistics network. An industry insider said, “If CJ Logistics’ logistics capabilities are added to E-Mart’s move to use stores as distribution centers, synergy is likely to be great,” he said. “There is a possibility that it will lead to a cooperative relationship that can increase mutual efficiency.”
[김태성 기자 / 박대의 기자]
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