Online shopping’war of money’ begins… Group 1 Coupang with live ammunition and Naver in a bout

Input 2021.02.16 15:14

Coupang raises trillions of won by listing on the US stock market
Coupang delivers groceries, Naver specializes in price comparison
Fight over expansion of membership, open market, and live commerce

With news that Coupang is promoting listing on the New York Stock Exchange (NYSE), Naver is also receiving a lot of attention. With this listing, the stock market forecast that Coupang’s corporate valuation will soon lead to a re-evaluation of the Naver shopping business. A brokerage company also estimated Coupang’s corporate value at 60 trillion won and estimated Naver’s market cap at up to 80 trillion won. Naver’s stock price has risen every day after the Lunar New Year holiday. On the 15th, Naver closed at 38,5500 won, up 5.18% from the previous day, and on the 16th, it is rising and falling from the 400,000 won level.

Another point to watch along with corporate valuation is the’bleeding competition’ with Naver, which intensifies after Coupang’s listing. The two companies are vying for first and second place in the Korean online shopping market. Coupang is leading the industry with a fast delivery service based on its unrivaled logistics infrastructure, while Naver is leading the industry with a shopping platform and simple payment system that can compare numerous prices for each product at a glance. While Coupang is expected to attract trillions of won worth of public offerings through listing, it is expected to fight a fierce battle with Naver over the expansion of its open market share.

It is reported that Coupang will raise funds of at least 1 trillion won through this listing. Coupang’s sales last year recorded 13.24 trillion won, an increase of about 90% from the previous year, but still suffered from operating losses. The cumulative deficit amounts to 4.5 trillion won. This is because it has built more than 150 distribution centers in 30 cities across the country, employs more than 40,000 employees, and the cost has increased like a snowball. Although he has a soft bank called’Jeonju’, it is burdensome to continue aggressive business expansion without transfusion of new external funds.

It was observed that Naver is also trying to strengthen the capabilities of the shopping business by announcing the issuance of corporate bonds along with the recent earnings announcement. However, a Naver official said, “It is not directly related to shopping,” and “It is for the purpose of investing in the cloud and content business.” Naver announced that it would issue a total of 400 billion won worth of corporate bonds through public disclosure the day before. The demand forecast will be conducted on the 17th to determine the size of the issue price. Naver said, “It can be decided or changed within the range of less than 700 billion won in total.”

Competition between the two companies is unlikely to lead to shopping itself, such as who sells cheaper and ships faster. Coupang’s strength lies in the fresh food market. “Even if the price is a little expensive, I will get quality food quickly” is the consumer sentiment of customers using Coupang. Naver is also expanding its logistics network through partnerships with CJ Group and Homeplus, but its main focus is a price comparison platform. Unlike Coupang, customers who visit Naver shopping mainly look for electronic products and home appliances. An industry insider said, “Each has its own strengths, and it is unlikely that Coupang will suddenly focus on price comparison, or Naver will give priority to food delivery.”

Instead, weight is placed on the prospect of expanding the ecosystem such as membership and fiercely fighting over who will acquire more loyal customers. It is a strategy that once a customer starts using the service, it aims for a lock-in effect that uses the existing one without switching to another service. Naver is operating’Naver Plus Membership’ for 4,900 won per month, and Coupang is running’Coupang Rocket Wow Membership’ for 2,900 won per month. As of the end of January, the number of registered members is 2.5 million and 4.7 million, respectively. While providing differentiated benefits such as point accumulation and free shipping, the point where the two memberships meet is content. In December last year, Coupang launched an online video service (OTT)’Coupang Play’ and included it in membership. Naver plans to add OTT’Taving’ operated by CJ to membership in the near future.

The live commerce market, which is rapidly emerging in recent years, is also expected to become a major contact between the two companies. Live commerce, a kind of Internet home shopping, is characterized by the fact that consumers and sellers exchange real-time conversations. The domestic market has just stepped up and is expected to double every year. There are also observations that the live commerce market will reach 10 trillion won in 2023. Naver has already entered this market and is showing rapid growth. As of January, the cumulative number of buyers is reported to have reached 1 million. Coupang began operating a pilot service last month. The industry predicts that Coupang will quickly pursue Naver based on its shopping infrastructure and nearly 5 million membership members.

“This listing of Coupang means 100% business expansion,” said Seo Yong-gu, a professor of business administration at Sookmyung Women’s University. I don’t know if there is a company.” Professor Seo said, “It is expected that we will focus on raising the subscription model, such as expanding OTT,” and said, “At the same time, it is expected to compete fiercely with Naver over three axes, such as live commerce and open market.”