[Exclusive] SK Partners with Amazon

Imminent Investment of Up to 300 Billion KRW in Open Market 11st
Pre-purchasing Overseas Direct Purchase Products to Establish Next-Day Delivery System
SK Affiliate Accelerates 'Business Model' Innovation

[Asia Economy reporters Yoonju Hwang and Seulgina Jo] SK Group is partnering with the world's largest e-commerce company, Amazon. Amazon is set to make an investment of up to 300 billion KRW in 11st, a subsidiary of SK Telecom, entering the domestic e-commerce market. As early as next year, domestic consumers will be able to purchase overseas products sold on Amazon directly through 11st.

This is the result of aligned interests between Jeff Bezos, Amazon's CEO, who has shown interest in the Korean e-commerce market, and SK Group Chairman Chey Tae-won, who is aiming to expand new platform and commerce businesses within the group. It is expected that this e-commerce collaboration will pave the way for a full-scale 'super cooperation' between Amazon and SK Group overall, especially based on SK Telecom's ICT platform.

According to the investment banking (IB) industry on the 13th, SK Group is discussing a convertible preferred stock (CPS) investment ranging from 50 billion to 300 billion KRW between 11st, a subsidiary of SK Telecom, and Amazon for business cooperation. CPS is a type of stock that can be converted into common stock after a certain period and is usually issued to attract foreign investment.

An IB industry insider said, "Amazon has a strong interest in the Korean e-commerce market, but due to fierce competition, it has felt burdened to enter directly," adding, "SK Group chose e-commerce (11st) as a starting point to enhance consumer convenience domestically while expanding global super cooperation."

Specific investment amounts and roadmaps are expected to be outlined as early as the first half of next year. Initially, both parties hoped to start business cooperation within this year, but discussions have been somewhat delayed due to the impact of COVID-19.

11st plans to first establish a system that allows direct purchase of Amazon products through its site. The method involves pre-purchasing a large quantity of products listed on Amazon and storing them in logistics centers, so that when domestic consumers buy the products, they can be delivered the next day. This approach is expected to eliminate disadvantages such as long delivery times and high shipping costs that consumers have experienced with overseas direct purchases, thereby increasing consumer convenience. An industry insider said, "This is a big deal that could change the landscape of the e-commerce market."

Cooperation between the two companies' platforms is also expected to accelerate. It is reported that the decision to invest was strongly influenced by Chairman Chey, who has emphasized 'platforms,' and SK Telecom CEO Park Jung-ho. There is growing speculation that cooperation with Amazon could expand across SK Telecom's ICT platform businesses, including online video services (Amazon Prime) and audiobook services (Audible). 11st, representing SK Group's commerce business, is one of SK Telecom's core new businesses following its declaration to move beyond telecommunications. It is also preparing for an initial public offering (IPO) soon.

Another IB industry insider said, "SK Telecom, at the center of SK Group's governance restructuring, is aiming to enhance corporate value through IPOs of subsidiaries like 11st," adding, "This will not only increase 11st's corporate value but also serve as an opportunity to expand super cooperation with Amazon within the group."