Input 2021.02.19 06:00
Top 3 e-commerce after Coupang and Naver Shopping
Fresh food is strong, but the product assortment is weak
19th E-Mart (139480)According to the public announcement, SSG.com’s transaction value last year was KRW 3.923.6 billion, an increase of 37% from the previous year. Sales increased by 53% compared to the previous year to 1.294.1 billion won.
Although online shopping demand has soared due to the coronavirus infection (Corona 19), only Coupang (41%), Naver Shopping (38%), and SSG.com saw sales growth of more than 30% last year among domestic e-commerce companies. The rest of the companies saw single-digit growth or reverse growth, except for eBay Korea, which grew by 14%.
Accordingly, the industry is criticized that SSG.com will settle in the’Top 3’along with Coupang and Naver Shopping. This is because of the expectation that the logistics competitiveness using fresh food know-how based on E-Mart and stores nationwide will increase. There is a precedent for the US hypermarket Walmart to compete with Amazon in this way.
However, it is pointed out that SSG.com’s shortcomings are that the product assortment falls short of its competitors. Coupang and Gmarket have 200 million and 100 million items, respectively, while SSG.com has 10 million items, which is only one-tenth.
The company has been preparing for an open market business by adding’mail-order brokerage service’ to the terms of use in February of last year and obtaining approval for registration of the electronic financial business by the Financial Supervisory Service. It was originally planned to start the business last year, but to improve stability, the launch date was postponed to this year. At the end of last year, Former Timon Vice President and Chief Financial Officer (CFO) was appointed as Chief Strategy Officer (CSO), and at the beginning of this year, Coupang and eBay recruited food-related product planners and HR executives respectively.
To this end, SSG.com started a large-scale public recruitment on the 15th that recruits experienced employees in 15 jobs including IT development, online product planning, branding, and channel alliance.
In addition to increasing the assortment of products, open markets have many advantages. Increasing traffic can increase advertising revenue. Major open market companies such as eBay Korea and 11th Street earn half of their sales from advertising revenue. Amazon also makes more than 10 billion dollars a year from advertising.
Distribution restrictions can also be avoided. SSG.com, which sells fresh food and daily necessities based on E-Mart, cannot deliver products on mandatory holidays according to the Distribution Industry Development Act, but there is no such regulation in the open market, a mail-order brokerage business. There is an expectation that activating the open market will fill the service gap caused by regulations.
The problem is how it works. Lotte Shopping (023530)The group integrated shopping mall’Lotteon’, which was launched in April of last year, has put forward a’two-track’ strategy that combines direct purchase and open market from the beginning of its launch. SSG.com is also expected to implement a two-track strategy.
But inside the company, skepticism comes out. This is due to concerns that Shinsegae Group’s profits will decline if the products of its affiliates and open market products are in a competitive landscape. You may get caught up in controversy over selling fake goods or popping prices that often occur in open markets.
An executive of an e-commerce company said, “There will be a dilemma as to whether an open market based on an ultra-low-cost strategy will match the image of Shinsegae Group. Even if you do an open market, you will be thinking about a method suitable for the corporate image.”
Through this, 120 million Shopify sellers announced an open market operation plan to sell products in the Wal-Mart marketplace (marketplace). Shopify sellers sell products at Wal-Mart shopping malls, and use Wal-Mart’s delivery and return policies.
It is observed that SSG.com will also plan an open market strategy in this way. In partnership with #Naver# smart stores, products are sold at SSG.com, and products are exchanged or picked up at E-Mart stores. It is also interpreted as part of this that Jung Yong-jin, vice chairman of Shinsegae Group, met Lee Hae-jin, Naver Global Investment Manager (GIO) on the 28th of last month.
Chung-Hee Lee, Professor of Economics at Chung-Ang University, advised that “SSG.com took advantage of the fresh foods of E-Mart to make a difference even in the solo e-commerce platform”. .