"Naver and Coupang Move... E-commerce Busy Calculating Strategies Over eBay"

[Asia Economy Reporter Yuri Kim] The domestic e-commerce market's "top three consolidation" is causing deep concerns within the industry. Currently, Naver and Coupang, which have established a duopoly, are announcing aggressive investments backed by massive financial resources, sparking worries about "market dominance."

◆ eBay Korea Acquisition Battle Begins

According to the distribution industry on the 5th, all major distribution companies except Hyundai Department Store are showing interest in the preliminary bidding for eBay Korea. Initially, when the sale of eBay Korea was officially announced and a valuation of 5 trillion won was mentioned, the general industry reaction was that it was "excessive." A senior industry official stated, "If the entire company is put up for sale around 5 trillion won, there is no business operator who would readily step forward," adding, "(The sale process) is already somewhat delayed, and if it is to proceed, a split sale should be considered." However, as the sale has become more active, companies such as Shinsegae, Lotte in the distribution sector, Kakao in the IT sector, and private equity funds are showing "initial interest" and are calculating their options.

The industry agrees that a major shift in the e-commerce market this year was anticipated. With Coupang's likely listing on the New York Stock Exchange on the 11th approaching, and Naver actively expanding its small and medium-sized enterprise (SME) business this year, the consensus is that to survive as a winner in the rapidly changing e-commerce market, scaling up is essential.

◆ Complex Calculations in a 'Winner-Takes-All' Market

Shinsegae's SSG.com has established its position by leveraging online-offline synergy and fresh food competitiveness, increasing its sales by 53.3% to 1.2941 trillion won last year and reducing operating losses. However, it still lags significantly behind the industry leaders in scale. SSG.com's transaction volume last year was 3.9236 trillion won, falling short of 4 trillion won and showing a gap of more than six times compared to the top players.

Lotte is also facing major changes, including the recent resignation of its head, as Lotte ON has experienced sluggish performance. Last year, Lotte's e-commerce transaction volume was 7.6 trillion won, growing only 7%. Lotte also deliberated extensively when TMON was put up for sale in 2019.

Kakao has also emerged as a strong acquisition candidate. Kakao Commerce has rapidly grown, with annual transaction volumes exceeding 3 trillion won. However, there are evaluations that its business centered on the KakaoTalk platform has limitations. If Kakao acquires eBay Korea, it can expand its business into the open market and increase its annual transaction volume to around 25 trillion won, enabling it to catch up with rival Naver.

An industry insider said, "Following last year's rapid rise of the e-commerce market due to COVID-19, this year the leading players with massive financial power will begin to reshape the industry landscape, forcing the entire industry to enter a battle to become the winner. While the financial burden of acquiring large companies cannot be ignored, the thought that competitors might acquire them and initiate changes will cause deep concerns."