[Into the Stock] Jeong Yong-jin's Winning Move with eBay Acquisition... Shinsegae Group DNA 'Online·Digital'

Digital Enterprise Transformation... Real Estate-Centered Assets Become 'Digital Assets'
Accelerating 'Future Distribution' Leadership Through Offline + SSG + eBay Synergy

[Asia Economy Reporter Lee Seon-ae] "The decision criterion is not how much, but how valuable it can be made." What is the meaning behind Vice Chairman Chung Yong-jin of Shinsegae Group’s remarks regarding the acquisition of eBay Korea? The acquisition effect he emphasized is precisely the synergy effect from building an integrated online and offline ecosystem. Now, Shinsegae Group is turning its business structure 180 degrees toward 'online and digital.' The reason Shinsegae Group is focusing on such a bold transformation is that the e-commerce market is rapidly growing due to advances in digital technology and is quickly becoming dominated by a few top players.

◆ Shinsegae Group’s Digital Transformation = According to Statistics Korea on the 9th, the domestic e-commerce market grew about 2.5 times from approximately 65 trillion won in 2016 to about 160 trillion won in 2020, and is expected to grow at an annual rate of over 10% until 2025. Amid this, as of 2020, the top three operators hold about 43% of the total market, demonstrating enormous influence, and competition to lock in customers and attract new ones is intensifying.

Accordingly, Shinsegae Group has officially begun its journey to establish itself as a leading company in the domestic e-commerce market. After acquiring eBay Korea, the online portion within the Emart division is expected to reach about 50%, indicating a rapid shift of the future business core to online and digital. Shinsegae Group emphasized, "We will accelerate digital transformation through the acquisition of eBay Korea and quickly reorganize our business structure into 'online & digital' to establish ourselves as a leading player in the domestic e-commerce market."

The vision is to become the undisputed number one domestic distribution business by maximizing mutual synergy effects based on not only the offline capabilities of Emart and Shinsegae Department Store but also the strong non-food competitiveness of eBay Korea, which has the largest seller base in the country through the grocery mall SSG.com.

The driving force behind this vision lies in an overwhelming customer pool. The number of eBay Korea subscribers has steadily increased from 17 million in 2016 to 21 million in 2020. The paid membership Smile Club, launched in 2017, grew from 1 million members in 2018 to 2.7 million in 2020, a 2.7-fold increase in two years. The loyalty shown by Smile Club members is also remarkable. As of 2020, the annual average purchase amount per Smile Club customer was 3.2 million won, more than six times the 500,000 won average for regular customers. Half of eBay Korea’s annual transaction volume is based on Smile Club members.

Adding to this, Shinsegae Group’s 20 million customers from Emart, department stores, SSG.com, and Starfield are expected to provide the best customer competitiveness. Furthermore, based on the complementary product assortments between SSG.com’s grocery capabilities and eBay Korea’s diverse selections, a fully developed e-commerce business model with extreme competitiveness can be realized.

SSG.com is recognized as having the best grocery shopping capabilities in Korea through its connection with Emart. eBay Korea, on the other hand, has the largest seller base in the country with 140,000 sellers and dominates the open market sector with a wide range of non-food products.

Shinsegae Group explained, "With the acquisition of eBay Korea, cross-selling across all product categories?from fresh and processed foods to daily necessities, electronics, and fashion?is now possible. Strengthened buying power and price competitiveness through integrated procurement enable us to implement a complete e-commerce model."

NH Investment & Securities analyst Lee Ji-young said, "The combination of eBay Korea’s platform influence and IT capabilities with Emart’s logistics and merchandising capabilities is expected to propel the company to become an end-to-end commerce operator, similar to Coupang, covering the entire commerce process," adding that the growth momentum is sufficient.

◆ Maximizing Synergy Effects = Experts analyze that combining Shinsegae Group’s offline operational know-how and logistics capabilities, accumulated as Korea’s top distribution company, with eBay Korea will maximize synergy effects.

Samsung Securities analyst Park Eun-kyung said, "Since Emart has started aggressive investments in the e-commerce business, there is a possibility that this marks the starting point for long-term valuation rerating," adding, "Based on the overwhelming transaction volume of Emart + eBay Korea, which amounts to 50 trillion won, Emart’s large-scale logistics investments are expected to lead to full-fledged synergy creation and competitiveness enhancement."

Shinsegae Group plans to invest more than 1 trillion won over the next four years in online fulfillment centers, leveraging the know-how of SSG.com, which operates three state-of-the-art online fulfillment centers (handling storage, packaging, shipping, and delivery). This will enable eBay Korea sellers to use SSG.com’s nationwide logistics network for same-day delivery and improve inventory management efficiency, thereby increasing competitiveness.

From SSG.com’s perspective, securing large volumes from eBay Korea sellers will increase the utilization rate of logistics centers. This will create a virtuous cycle model where both sides win and maximize investment efficiency. Additionally, eBay Korea can significantly strengthen logistics competitiveness by using over 160 Emart stores nationwide and more than 7,300 offline bases of Shinsegae Group as online logistics forward bases.

Yuanta Securities analyst Lee Jin-hyup said, "The acquisition of eBay Korea is significant in securing high-quality intangible assets. By integrating eBay Korea’s high-quality technology and talent pool into the e-commerce business, synergy creation such as platform advancement is possible," explaining, "Fulfillment is not simply storing and delivering products in a warehouse; it requires development work to link e-commerce platforms, warehouses, courier companies, and sellers, making it a highly complex service. The fact that eBay Korea has operated this for a long time highlights its know-how and development capabilities." He also added that eBay Korea’s pioneering role in paid memberships, easy payment, and Smile Card services in Korea positively reflects its intangible assets.

Meanwhile, Shinsegae Group has been strategically reallocating group assets centered on real estate and securing investment funds for several years to proactively and actively respond to the rapidly changing management environment triggered by digital new technologies and to create a new future distribution paradigm. In fact, it currently holds about 900 billion won from the sale of Emart Gayang branch and Byeollae parking lot, as well as approximately 1 trillion won in cash. To improve asset efficiency, it is also reviewing various asset distribution plans based on offline stores such as Emart locations, indicating that acquisition funds are sufficient.

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