Naver and Coupang have clearly established themselves at the forefront of the e-commerce market, which has never been a strong player for more than 10 years, and eBay Korea, which was like a ‘Teju Daegam’, came out on the market for sale at a ransom of about 5 trillion won.
The delivery app’Yogiyo’ is also looking for a new owner for a ransom of about 2 trillion won under the direction of the regulatory authorities to sell Yogiyo instead of a merger and acquisition by the German parent company’People of Delivery’.
Riding the trend of the internet and mobile era and establishing itself as a popular service, who will be the new owners of one or two companies?
Even though I don’t know the future, e-commerce honors student’eBay Korea’
Ebay Korea, well-known for online shopping’Gmarket’ and’Auction’, is an industry honor student with attractive transcripts with annual transaction volume of 19 trillion won, sales of 1 trillion won, operating profit of 61.5 billion won, and a surplus for 15 consecutive years. When competitors are struggling to lose money due to bleeding competition, we have built up rice in the barns by utilizing our long business experience such as attractive products and excellent marketing planning skills.
In particular, even in 2019, when Coupang’s growth was steep, it showed off eBay Korea’s potential to the market with the first breakthrough in annual sales of KRW 1 trillion and a 27% increase in operating profit compared to the previous year. The number of paid members of the membership service’Smile Club’ has increased significantly, and the number of subscribers and usage of’Smile Pay’, a simple payment service, has increased.
But why would eBay in the US want to find a new owner for a low-cost company that does so well?
First of all, it is because it looks into the future of the Korean e-commerce market. Over the years, Naver Shopping and Coupang’s growth was frighteningly fast, and it seems that it was difficult to find a new competitive edge that could overturn the market. It can be interpreted that the strategic judgment was that there was no power to beat Naver Shopping, which was based on Naver, the number one search portal in Korea, and that there was no card that could surpass Coupang, which has invested trillions of won in logistics and delivery.
In particular, it is true that sales and transaction volume have increased, but the decline in operating margin is likely to have been read as a potential crisis signal for eBay. EBay Korea’s operating margin from 20% in 2010 decreased to 6.5% in 2017 and 5.7% in 2019. In other words, I earned it hard, but in the end, it means that the money is leaking somewhere. The decline in the operating margin appears to be a result of the increase in marketing and labor costs resulting from fierce competition.
In the end, from an eBay perspective, this is the’Golden Time’ where eBay Korea can be sold. This is because the annual transaction amount and sales are likely to continue to rise, but optimism in terms of market share and operating margin is difficult.
EBay Korea is definitely an attractive company in that it can take over the renowned open markets of Gmarket and Auction at once and exert immediate influence in the domestic e-commerce market. It is no doubt that it is’Daeeo’ that is worth paying attention to the acquisition by large retail companies such as Lotte, Shinsegae, and Hyundai Department Store, which are not using great power online.
But after all, the ransom of 5 trillion won is a problem. We come to the conclusion that it is not easy if we even think to leave the main battle by acquiring a company that can leave 61.5 billion won a year for 5 trillion won. Moreover, if there is no plan to overcome the offensive of Naver Shopping, Coupang, and Kakao Commerce, it seems that it is not right. Private equity firms MBK Partners and Coleberg Kravis Roberts (KKR) are also mentioned as potential acquisitions of eBay Korea, but the gap between the acquiree’s’random price’ and the acquirer’s’the amount that can be paid’ needs to be adjusted. I can see it.
‘Yogiyo’ is the dilemma to sell to a company that cannot be ranked first.
In the case of Yogiyo, which is currently the parent company of Delivery Hero, Germany, it is a real delivery app company that must be sold within about a year. This company also has a ransom of 2 trillion won, which is a stumbling block, but its attractive point is that it is a solid second-largest company with about 20% of the delivery app market share. In particular, the fact that the delivery app market is growing steeply due to Corona 19, etc., is a positive factor for Yogiyo’s acquisition that it can become a major player in the market where sales and transaction volume increase clearly’even if it is still.’
According to the industry, the volume of delivery app transactions last year is expected to exceed 15 trillion won. Considering that it was 2.47 trillion won in 2017, 4.89 trillion won in 2018, and 9.29 trillion won in 2019, this is a stormy growth.
However, if you look at Yogiyo’s future, you can see a lot of dark clouds. First of all, it is difficult to surpass the nation of delivery, which is a strong leader, and it is not possible to lightly see the growth of competitors such as Coupang (Coupangitsu) and KakaoTalk ordering, which are latecomers. As soon as the people of delivery get a start-up ticket and are classified as a foreign company, the threshold of entry into delivery apps for large companies freed from criticism of’alley commercial invasion’ is lowered even further. In addition, the advancement of public delivery apps in each region can be a small obstacle to Yogiyo’s growth.
Furthermore, Yogiyo recorded an operating loss of 69.4 billion won over the three years from 2017 to 2019. During the same period, cumulative sales recorded KRW 316.7 billion, showing rapid growth, but it can be interpreted as a result supported by a significant investment.
In other words, if you reduce your marketing costs, it is unlikely that customers will move to another service right away, and that there are not many loyal users like coupang or the ethnicity of delivery, which can be a deduction factor.
The calculation of the delivery hero, the seller who has to sell Yogiyo, also seems a bit complicated. This is because they have to hand over to a company that can spend close to 2 trillion won of money without threatening the people of the new family. Because of this, large distribution companies such as Naver, Kakao, Shinsegae, Lotte, GS, etc. with financial power are among the candidates, but the worries about “what if they grow into strong competitors” are inevitable.
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That is why foreign companies such as private equity funds with financial power and Door Dash, an American delivery app company, are being discussed. There is also a prospect that Coupang may acquire Yogiyo if it secures funding power after listing on Nasdaq. This also seems unlikely given the timing of Coupang’s listing on Nasdaq and the deadline for the sale of Yogiyo. Furthermore, in the case of Coupang (Coupang Itz), the scenario of Coupang’s acquisition of Yogiyo seems to be more blurry, as the nation of delivery is the most feared competitor as Yogiyo.
The industry’s interest is growing as to who will jump into this game as large-scale companies that sound like’jo (兆)’ rather than those that sound’billion’ appear in the market. Who will be the new owners of the two companies, who have the clear strength of being able to stand tall in the relevant market and give strength to their shoulders, but at the same time have anxiety that they can’t guarantee the future? Will they be winners with a high return on investment in 5 or 10 years, or will they be losers who mistake the trend of the times?