[Asia Exclusive] CEO Yoon Seok-am: "T-commerce as a Testbed for SMEs... Will Provide a Growth Platform"

Straightforward - Yoon Seok-am, CEO of SK Stoa
Started as a latecomer in the industry
Ranked first in both sales and operating profit in Q1 this year
Expanded channels to suit the untact era
Improved profits through differentiated marketing

Yoon Seok-am, CEO of SK Stoa, is being interviewed by Asia Economy on the 23rd. / Photo by Moon Ho-nam munonam@

[Interview with Myung Jin-gyu, Head of Consumer Economy Department] The T-commerce market is rapidly growing. The market size, which was 250 billion KRW in 2015, increased to 4.19 trillion KRW last year. This year, the market size is expected to reach around 5.4 trillion KRW. As the T-commerce market expands, opportunities for small and medium-sized enterprises (SMEs) to grow together have also increased. The government has demanded responsible roles from T-commerce companies in terms of contributing to SME revitalization and ensuring fairness in broadcasting. The proportion of SME products in the overall T-commerce programming exceeds 70%.

Among T-commerce companies, SK Stoa particularly emphasizes social value (SV). Established in 2017 by SK Broadband splitting off its existing T-commerce business, SK Stoa focuses on discovering and nurturing products with stories from SMEs and social enterprises, based on the trustworthiness of the SK brand. They actively recruited talent and developed various services. SK Stoa ranked first in the industry for both sales and operating profit in the first quarter of this year. Yoon Seok-am, CEO of SK Stoa, personally visited about 40 partner companies nationwide for approximately three weeks starting late June to express gratitude. In a recent meeting at SK Stoa’s headquarters in Sangam-dong, Mapo-gu, Seoul, CEO Yoon stated, "T-commerce should serve as a testbed for SMEs," adding, "We plan to provide differentiated services from the planning stage through production and sales to create a foundation for SMEs to grow." Below is a Q&A with CEO Yoon.

- The first quarter performance was solid. What are the expected results for this year?

▲ SK Stoa recorded sales of 61 billion KRW in the first quarter of this year, a 52.8% increase compared to the same period last year. Operating profit turned positive at 4.5 billion KRW. Due to the impact of COVID-19, consumer trends changed, and SK Stoa responded quickly to these changes. They stopped broadcasting travel products, which accounted for about 5% of last year’s programming, and increased the proportion of rental, food, daily necessities, and educational service product categories. The growth of the fashion private brand (PB) 'Helen Karen,' launched last year, was also remarkable. It sold out during its first broadcast and began gaining word-of-mouth popularity. The transaction volume increased by 12% compared to last year. The performance of products from SMEs and social enterprises has steadily improved. Notably, the sales broadcast for 'Jeju Dam-eun Jokbal,' conducted in cooperation with the Daejeon Economic and Trade Promotion Agency in March, achieved 300% of the target transaction volume. The first half of this year exceeded the target by more than 115%.

- What is SK Stoa’s unique competitive edge?

▲ SK Stoa improved profitability by expanding customer contact channels in the untact (non-face-to-face) era and conducting differentiated marketing for each channel. They expanded product competitiveness through partnerships with various specialty malls and 'shop-in-shop' collaborations. They strengthened their mobile app product lineup through partnerships with specialty malls such as 'Boribori' for infants and children, Half Club, and Hi-Mart. Additionally, by entering open markets, sales through partnerships increased by 235% compared to the same period last year. Mobile transaction volume in the first quarter grew 139% year-on-year. This was the result of diversifying the product portfolio, operating a customer membership system, and promoting various mobile-exclusive promotions such as 'Special Price,' '24 Time Deal,' and 'Stoa Mart.' Particularly, tangible products account for 35% of total mobile orders, indicating a steady increase in the mobile business share.

The new distribution platform 'SK Stoa ON,' launched using SK Planet’s media cloud, is growing rapidly. Sales through SK Stoa ON in the first half of the year exceeded 120% of last year’s annual performance. The number of customers purchasing products increased by about 327%, and sales rose approximately 320% compared to the same period last year.

Samick Furniture with sales of 5 to 6 billion KRW

Tripled sales after SK Stoa broadcasts

FC Barcelona razor also a big hit

Pursuing social and economic value simultaneously

- Portal companies like Naver and Kakao, as well as influencer-centered live broadcasts, are strengthening their presence. What is your countermeasure?

▲ The live commerce market will continue to expand. I believe the trend of consuming all videos on mobile, including general broadcasts, will strengthen. Even considering these changes, I do not expect the TV market size to shrink in the near term. Korea has very strong paid broadcasting. The main age group watching TV is people in their 50s and 60s. Home shopping’s main customers are also in their 50s and 60s. They are unlikely to skip TV and go directly to mobile. Moreover, home shopping is also strengthening its mobile business. TV operators will also do mobile live broadcasts simultaneously. For home shopping operators, this is an expansion of points of contact (POC), not a replacement.

- What is your outlook on the T-commerce market?

▲ The growth rate of TV home shopping is less than 10%. T-commerce is expected to grow more than 25% annually over the next three years. This forecast considers only natural growth. Since it started late, the growth rate is large. Therefore, the growth rate itself is not very meaningful. We consider natural growth to reach a transaction volume of 2 trillion KRW. Each company must establish differentiated strategies. Our future growth engine is 'SK Stoa ON.' Sales through this service are expected to reach 30 billion KRW this year. When sales reach 2 trillion KRW, SK Stoa ON’s sales will be about 150 billion KRW. The value of 'Stoa ON,' which is in the data domain, is infinite. As data accumulates, categories can be expanded and curation is possible. For example, if a customer watches a golf channel on BTV and buys golf equipment on 11st, Stoa ON can pop up golf product recommendations.

- Product competitiveness seems most important.

▲ As a latecomer in home shopping, it was not easy to broadcast popular products. Companies consider time as money, so naturally, they go where they can sell more. Therefore, we strongly pursued a platform strategy. We moved to an earlier channel number to increase exposure. We first expanded coverage through channels and placed products where many people visit. Currently, SK Stoa broadcasts on channel 17. In the early days, product competitiveness was about 10-20%, but now it is around 50%. Popular cosmetics still go to home shopping channels that broadcast live, where sales reach 700 to 800 million KRW per hour. Would they come to T-commerce where they can earn 100 to 200 million KRW? As competition intensifies and live broadcasters’ target prices rise, companies burdened by inventory have turned to T-commerce. Some companies that first entered home shopping have hit the 'life lottery' through SK Stoa broadcasts.

- Which companies has SK Stoa discovered and helped grow?

▲ There are Samick Furniture, Gomdori Vegetable Cutter, and FC Barcelona (razor), among others. Samick Furniture, which had annual sales of 5 to 6 billion KRW, recorded 15 billion KRW in sales in 2018 when it started broadcasting on SK Stoa. This year, it is expected to achieve 45 billion KRW in sales. The FC Barcelona razor was a big hit as SK Stoa exclusively purchased and sold it directly. SK Stoa strives to discover new companies that can pursue social and economic value simultaneously. In particular, it breaks down entry barriers to home shopping and discovers excellent products through product evaluation meetings with social enterprises, local governments, and small merchants. In the first half of this year, the SME product 'Jung Jun-ho Sesame Oil' achieved about 600 million KRW in transaction volume. Products from social enterprises such as 'Seaton Bakery Organic Cereal' and 'Pyeongchang Kkotsooni Kimchi Set' were developed through our 'Warmer Product Evaluation Meeting.' Through an event providing samples of 'Social Enterprise of the Month' products, social enterprises that have entered SK Stoa introduce their products to SK Stoa VIP customers, with 1,000 customers selected monthly by lottery. SK Stoa plans to actively utilize its know-how to support social economy enterprises continuously so that consumers can make value-driven purchases.

Summary by Reporter Lim Hye-seon lhsro@

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