'Korea's Amazon', the Battle for Dominance Intensifies Further

Competition in Logistics and Live Commerce Investment
Naver and Coupang Rivalry with Kakao Joining Next Month
Retail Giants Accelerate Digital Transformation... Counterattacks through Mergers and Alliances
E-commerce Market Grows Double Digits Annually... Offline May Be Surpassed Within 5 Years

[Asia Economy reporters Jo In-kyung, Kang Na-hum, Lee Jun-hyung] The battle for dominance between emerging new players and former giants in the distribution industry is heating up over the e-commerce market. The traditional competition over where and how large to open stores is shifting to which services are introduced first and how businesses are interconnected, bringing a big bang to the entire distribution sector.

Competition over the 'Korean Amazon'

Coupang is positioning itself as the Korean version of Amazon, focusing investments on logistics centers and live commerce. With the live commerce studio at its headquarters expected to be completed this month, synergy is anticipated to expand among its existing Rocket Delivery, Coupang Eats single-item delivery, and OTT service Coupang Play.

Naver Shopping, the number one e-commerce company with a transaction volume of 28 trillion won last year, is building a vast e-commerce shopping ecosystem centered on its open market-style Smart Store, which includes traditional markets and large supermarket shopping. Its strategically nurtured live commerce service, 'Naver Shopping Live,' has emerged as a new growth engine, recording 170 million cumulative views and approximately 1.7 million cumulative buyers in the first quarter.

Kakao is also entering the e-commerce market. Next month, Kakao will launch its e-commerce platform service 'Kakao Jeom.' It will bring manufacturers' own malls onto KakaoTalk. Differentiating from Naver, which charges entry fees, Kakao plans to adopt strategies such as 'zero commission' and providing user data.

The live commerce service 'Kakao Shopping Live' surpassed 50 million cumulative viewers within one year of its launch, with an average brand transaction amount of 100 million won per broadcast. Creating a separate ‘Kakao Shopping’ tab within KakaoTalk to improve accessibility proved effective.

Distribution Industry Accelerates Digital Transformation

In response to the offensive by specialized e-commerce companies, existing distribution companies have chosen mergers and acquisitions (M&A) and integration of online and offline shopping channels as their countermeasures.

Lotte Shopping launched 'Lotte ON' last year, integrating seven channels including marts and home shopping, and acquired shares in the secondhand trading platform 'Junggonara.' E-Mart expanded SSG.com’s business area by acquiring the fashion platform W Concept. CJ O Shopping merged TV home shopping, internet shopping malls, and T-commerce last month to launch a new integrated brand, 'CJ OnStyle,' with a focus on strengthening the rapidly growing live commerce business. GS Retail and GS Home Shopping are also accelerating digital transformation in preparation for their merger in July.

Meanwhile, according to Statistics Korea’s online shopping trends, the domestic e-commerce market surpassed 113 trillion won in 2018, grew to 135 trillion won in 2019, and reached 161 trillion won in 2020. The share of e-commerce in the total retail market increased from 24.4% to 33.9% during the same period. Although still smaller than the offline distribution market, e-commerce maintains double-digit growth rates annually, suggesting the possibility of e-commerce overtaking offline distribution within the next five years.

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