eBay Acquired by Jeong Yong-jin's New Vision... 180-Degree Shift to 'Online and Digital'

[Asia Economy Reporter Lee Seon-ae] "The decision-making criterion is not how much, but how much value can be created."

What is the meaning behind the remarks made by Chung Yong-jin, Vice Chairman of Shinsegae Group, regarding the acquisition of eBay Korea? The acquisition effect he emphasized is 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 average 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.

In response, Shinsegae Group set the goal to "accelerate digital transformation through the acquisition of eBay Korea and rapidly reorganize the business structure into 'online & digital' to become a leading player in the domestic e-commerce market." The vision is to maximize 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 a large seller base and the grocery mall SSG.com, becoming the firm number one integrated online-offline distribution company in Korea.

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. Adding to this the 20 million customers of Shinsegae Group’s Emart, department stores, SSG.com, and Starfield, it is expected to have the best customer competitiveness. Furthermore, based on the mutual complementarity between SSG.com’s grocery shopping capabilities and eBay Korea’s diverse product assortment, it is also noteworthy that a fully developed e-commerce business model with strong competitiveness can be realized.

◆ 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. Park Eun-kyung, a researcher at Samsung Securities, expected, "Based on the overwhelming transaction volume of Emart + eBay Korea, which reaches 50 trillion won, Emart will lead large-scale logistics investments, driving the creation of synergies and enhancing competitiveness."

Shinsegae Group plans to invest more than 1 trillion won over the next four years in online fulfillment centers, leveraging the expertise of SSG.com, which owns 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. Through this, both sides can build a win-win virtuous cycle model 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.

Lee Jin-hyup, a researcher at Yuanta Securities, explained, "Fulfillment is not simply storing and delivering products in a warehouse; it requires development work to link systems such as e-commerce platforms, warehouses, courier companies, and sellers. It is a highly complex service, and the fact that eBay Korea has operated it for a long time is a point that highly evaluates its know-how and development capabilities."

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