Naver Achieves Record Quarterly Performance, Shinsegae's 'SSG.com' Closely Chases... Facebook Also Joins the Race

Kakao Also Achieves Record Quarterly Earnings... 'Kakao Shopping Live' Hits Big
Fierce E-commerce Competition with Facebook Joining In

[Asia Economy Reporter Jin-gyu Lee] Naver is expected to achieve its highest-ever quarterly performance in Q2 due to increased e-commerce sales. Thanks to the prolonged COVID-19 pandemic, demand for contactless shopping has risen, allowing Naver to closely chase SSG.com of the Shinsegae Group. Kakao also announced record-breaking Q2 results by strengthening its online shopping business based on 'KakaoTalk (KakaoTalk)'. Meanwhile, with Facebook entering the market, the domestic e-commerce market is emerging as a battleground.

◆ Naver’s Highest Quarterly Sales Expected = According to the IT and securities industries on the 23rd, Naver’s Q2 sales amid the prolonged COVID-19 situation are estimated at 1.806 trillion KRW, about 10% higher than the same period last year (1.6303 trillion KRW). This marks Naver’s highest quarterly performance ever. Operating profit is also expected to increase by 80% from 128.3 billion KRW in the same period last year to 230 billion KRW. In particular, the business platform segment, which includes Naver Shopping and shopping search ads, is projected to generate about 790 billion KRW in Q2 sales. Considering that SSG.com, a leading domestic online shopping mall, recorded 917 billion KRW in Q1 sales, Naver has grown to a level that threatens large online shopping malls.

To strengthen its e-commerce business, Naver has been supporting 320,000 Smart Store sellers on Naver Shopping with various functions since March. A representative example is enabling sellers to chat with customers in real time or move to the product purchase page with a single mouse click. The paid membership service 'Naver Plus' costs 4,900 KRW per month and offers access not only to Naver Shopping but also to webtoons, cloud services, and more. It also rewards up to 5% of the amount paid via Naver Pay on Naver Shopping. Researcher Tae-na Jo of Heungkuk Securities said, "Significant synergy effects are expected between Naver Pay, Naver Bank, and various services centered on Naver Shopping."

◆ 'Kakao Shopping Live' Hits Big = Kakao’s Q2 sales are also expected to reach 893 billion KRW, a 21% increase from 733 billion KRW in the same period last year, marking its highest quarterly performance. This strong performance is partly due to the 'Talk Biz' segment, which includes commerce businesses such as online shopping, posting Q2 sales of around 240 billion KRW, a 72% increase from 138.9 billion KRW in the same period last year. Kakao Shopping Live, which allows KakaoTalk users to enjoy shopping while watching live videos in chat windows, has surpassed 560,000 registered KakaoTalk friends just one month after its launch. Kakao stated, "Since last month, we have established a dedicated organization for live commerce and are focusing on developing the Kakao Shopping Live business."

The reason Naver and Kakao are focusing on the e-commerce business is that the domestic e-commerce market is growing rapidly. According to Statistics Korea and others, the domestic e-commerce market transaction size doubled from 66 trillion KRW in 2016 to 134 trillion KRW last year, and it is expected to exceed 140 trillion KRW this year. Coupang also recorded sales exceeding 7 trillion KRW domestically last year.

◆ Market Expansion with Facebook’s Entry = With Facebook’s entry, competition in the domestic e-commerce market has intensified. Facebook, which has 20 million domestic users, launched the online store creation service 'Facebook Shops.' Users can create their own online stores for free on Facebook and Instagram and promote and sell products. Facebook users can search for and purchase products directly on Facebook. Facebook explained, "This service connects users to personal online stores via Facebook links without intermediary fees, so it is not subject to domestic e-commerce laws," and "Payments are not made directly on the Facebook platform." An industry insider said, "As contactless shopping increases, the e-commerce market is intensifying competition between existing distribution companies and ICT companies," adding, "With Facebook’s participation, the domestic e-commerce market is likely to grow even faster."

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