“It’s getting harder and harder to escape”… Naver swallowed up online shopping, small business owners afraid of solo

Input 2021.03.05 10:27

Naver, the number one shopping service provider in Korea
Search, advertisement, payment, and now delivery service
“I’ve already been subordinated for a long time…I hold my life”

A, who sells leisure products online and offline, received an inquiry last month from a customer saying that the site is strange. He said, “I can’t pay with Naver Pay.” This customer said, “You have to pay with Naver Pay to earn a lot of points,” and “You can’t pay in any other way.” Mr. A entered the reorganization of the Burinake shopping mall and changed it so that Naver Pay can also buy goods.

Naver’s presence in the domestic online shopping market is absolute. From simple search to price comparison with other companies, advertisements, payments, etc., both sellers and buyers are highly dependent on buying and selling products without going through Naver. It is true that it is a free platform with zero cost to enter, and has a great utility, such as a low payment fee and a simple payment system compared to other open markets. In addition, Naver’s recent logistics business is speeding up, and among small and medium-sized businesses, there is anxiety that “it is increasingly scary to subordinate to Naver.”

According to the information technology (IT) industry on the 5th, the online service with the largest amount of payment in Korea in January was Naver. This is the result of an app analysis company WiseApp surveying payment amounts such as credit, debit card, and account transfer for people over the age of 20. Naver ranked first with KRW 2.805.6 billion and Coupang ranked second with KRW 2,4072 trillion. Other services such as webtoon are included, but as the proportion of payments related to shopping is large, it is estimated that Naver is in the lead in the domestic e-commerce (e-commerce) market.

Naver is not satisfied with this and is eager to expand the shopping ecosystem to widen the gap with its competitors. Naver Pay, a simple payment service, is a prime example. In the fourth quarter of last year, Naver Pay’s transaction amount recorded 7.8 trillion won, an increase of 68% from the same period last year. Naver CEO Han Sung-sook said, “It is thanks to the growth of smart stores (small and medium-sized business start-up platforms) and expansion of external partners.” The influx of small and medium-sized business (SME) customers is spreading rapidly with word of mouth.”

‘Naver Membership Plus’, which provides additional shopping points and various content benefits for 4,900 won per month, is also a factor that intensifies the phenomenon of’Naver subordination’. Naver Membership, launched in June of last year, has secured 2.5 million subscribers at the end of the year. Naver is aggressive in marketing to secure subscribers, such as introducing an annual subscription model that lowers the usage fee to 3900 won per month. In addition, so far, benefits have been given mainly to services operated by Naver such as Naver Webtoon, audio book, and music platform’Vive’. In addition, CJ announced the news of its partnership with Teabing, an online video service (OTT). In the future, Naver membership subscribers will be able to choose the’unlimited use of teabing broadcasts’ as a benefit, and the influence of Naver membership is expected to expand further.

The next blueprint for Naver Shopping is logistics. Naver announced on the 2nd that it will focus on logistics for small and medium-sized business people this year at an event delivering news of its major business. CJ Logistics is a major partner, and Naver plans to expand its own distribution network through alliances and investments with various logistics startups. The intention is to build customized logistics tailored to the characteristics of each industry so that sellers can focus on product competitiveness without worrying about distribution networks. Although there is no disagreement that it is meaningful, it is a point of concern that Naver is strengthening its unrivaled position in the online shopping market. The logistics system was the one that Coupang, who had been fighting for superiority in the same industry, had an advantage over Naver.

Small and medium-sized business people are concerned about the situation where Naver’s monopoly structure is intensifying as it is now. It is because they are friendly to them by advocating’win-win’ and’cooperation’ right now, but no one can guarantee that they will continue to show the same image in the future. Currently, Naver is under investigation by the Fair Trade Commission for abuse of market power in relation to N Pay (predecessor to Naver Pay). Using the status of the No. 1 search provider, N-Pay was first exposed as a payment method, and an additional button was clicked to use another payment method. Naver also received a penalty of 26 billion won from the Fair Trade Commission in October last year on charges of preferential treatment for companies that entered its shopping mall by adjusting the search algorithm. In this case, it is expected that Naver will file an objection lawsuit and final judgment will be made in court.

The president of a company who entered Naver Shopping said, “Naver is definitely cheaper than other platforms and has more support programs.” “The relationship is right, and the story will not change after we settle down to some extent later?” Another company president said, “In fact, online shopping operators have already been subordinated to Naver for a long time.” “I said.