Naver 'Click' Surpasses Department Stores... Earnings Expected to Rise with Online Shopping Growth

Impact of COVID-19 Spread... Naver Brand Store Enables Department Stores to Save on Commission Fees

Photo by Asia Economy DB

[Asia Economy Reporter Geum Bo-ryeong] Due to the spread of the novel coronavirus infection (COVID-19), online shopping has increased, and it has been revealed that Naver (NAVER) has replaced the role of department stores.

According to Statistics Korea on the 16th, the monthly transaction amount of e-commerce in February, when COVID-19 began to spread in local communities, was 11.9618 trillion won, an increase of 24.5% compared to the same month last year. Looking at data from the Ministry of Trade, Industry and Energy, online sales increased by 34.2% year-on-year, while offline sales decreased by 7.5%. Among them, department stores showed a 21.4% decrease in sales compared to the previous year.

Naver seized the opportunity while department stores faltered. Naver had a high proportion of durable goods that require information such as price comparison and product reviews for purchase decisions. As a result of maintaining a direction to support small and medium online shopping mall operators and offline self-employed businesses, the number of stores registered in Naver Smart Store was 300,000 as of the first quarter, with 800 million registered products and 7 million new products registered daily.

In particular, the Brand Store, which opened in February, allows large corporations or specific brands to directly enter Naver like a department store. LG Household & Health Care, L'Occitane, CJ CheilJedang, Ilroom, Livart, and Millet have already confirmed their entry. Naver plans to attract about 200 brands this year.

Kim Chang-kwon, a researcher at Mirae Asset Daewoo, explained, "Naver's transaction amount in February is estimated to have increased by 39% compared to the previous year," adding, "Naver and Coupang are the only companies that recorded growth rates higher than the market." He continued, "Naver Brand Store can also expand categories such as clothing, smartphones, and automobiles, which could bring a significant increase in Naver's e-commerce sales and an additional department store replacement effect," and analyzed, "From the perspective of large corporate brands, there is an advantage in saving high commissions from department stores and it may be easier to grasp consumer patterns in real time."

Along with the increase in online shopping, expectations for Naver's performance momentum are gradually rising. Even in the fourth quarter, there was a base effect of sluggish clothing sales due to warm weather last year, and the fourth quarter is the peak season when nearly 30% of total online shopping transaction amounts are recorded. Additionally, the effect of Naver's market share expansion confirmed in February and last month is anticipated. Naver's stock price, which was 144,000 won on the 18th of last month, rose 17% to 168,500 won on the 14th within a month.

This content was produced with the assistance of AI translation services.