SSG.com Consolidates E-commerce Business Capabilities... Achieving Economies of Scale

PG Subsidiary Shinsegae Payments to be Liquidated
Existing Staff and Assets Absorbed by SSG.com
Simple Payment Service 'SSGPAY' to Operate from June
Growth Amid COVID-19... Continued Investment in Automation Equipment

[Asia Economy Reporter Cha Min-young] As the distribution industry focuses its e-commerce capabilities to prepare for the post-COVID-19 era, SSG.com, the next-generation growth engine of Shinsegae Group, is consolidating its e-commerce business capabilities to achieve economies of scale. In the second half of this year, the group’s core simple payment service, SSG Pay (Ssuk Pay), will be unified under SSG.com, while also absorbing the personnel and tangible and intangible assets of its electronic payment subsidiary.

◆ SSG.com also absorbs Shinsegae Payments = On the 8th, Shinsegae Payments, an electronic payment gateway (PG) subsidiary of SSG.com, announced that it held an extraordinary shareholders’ meeting on the 1st of this month and resolved to dissolve the corporation. A liquidator has been appointed, and subsequent procedures such as reporting and public notice of the dissolution reason will follow.

Established in 2013, Shinsegae Payments provided electronic payment services to the group’s online malls such as Emart Mall and Shinsegae Mall before being unified under SSG.com. Even after SSG.com officially launched at the end of 2018, it continuously handled PG tasks and sustained growth. Shinsegae Payments will be absorbed into SSG.com. The existing Shinsegae Payments staff, numbering around ten, will be transferred to SSG.com after liquidation. Since the CEO of Shinsegae Payments is concurrently held by Choi Woo-jung, CEO of SSG.com, it is expected that there will be no major changes in the overall structure.

Shinsegae Group is consolidating all e-commerce capabilities within the group under SSG.com. This is because the role of online distribution has grown significantly after COVID-19, and SSG.com is also experiencing a full-fledged growth phase. SSG.com is also the ambitious project of Shinsegae Group Vice Chairman Jeong Yong-jin, who emphasizes contactless consumption. Vice Chairman Jeong stated, "Until now, Emart and Shinsegae Department Store have driven Shinsegae Group’s growth, but future growth will be led by the newly established e-commerce corporation (SSG.com)."

◆ Group’s e-commerce capabilities unified in one place = In June, SSG.com will take the lead as the operator of the group’s simple payment service, Ssuk Pay. It will receive the business rights of the platform division from Shinsegae I&C, the group’s existing IT subsidiary. The business assets to be transferred amount to 28.9 billion KRW, accounting for 9.46% of the assets. Ssuk Pay is a group-wide simple payment service that issues and manages prepaid electronic payment instruments based on a mobile payment platform, operates electronic payment gateway services, and conducts other specialized foreign exchange businesses. It is the first in the distribution industry to offer open banking services.

Although SSG.com recorded a loss in its consolidated financial statements last year, this was largely due to initial investment costs such as the automated logistics facility ‘Neo.’ Looking at Shinsegae Payments’ performance alone reveals a steep growth trend. Shinsegae Payments’ sales in 2019 were approximately 60.1 billion KRW, an increase of about 12 billion KRW compared to the previous year. During the same period, operating profit and net income each tripled to 1.6 billion KRW and 1.4 billion KRW, respectively.

The growth momentum has accelerated since the COVID-19 outbreak earlier this year. In April (1st to 28th), monthly sales based on Ssuk Delivery increased by 48% year-on-year, continuing the upward trend following February (60%) and March (45%). The automated logistics facilities Neo phases 1 to 3 initially faced concerns due to massive initial investments but have now stabilized and established themselves as cash cows through services like dawn delivery. Shinsegae Group plans to invest 1.7 trillion KRW by 2023 to build seven more Neo online-only logistics centers for SSG.com.

An SSG.com official explained, "As part of the process of concentrating capabilities in SSG.com, such as bringing Ssuk Pay from Shinsegae I&C, the integration of the PG payment agency company Shinsegae Payments was also considered a natural step. Before integration, Shinsegae Payments existed as a separate subsidiary to handle payments for Shinsegae Mall and Emart Mall, but this is being internalized during the current restructuring of SSG.com."

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