[Exclusive] IT Industry 'Live Commerce' War... TikTok Joins the Battle

'Live Commerce' Rapidly Emerging as a Core Business in the IT Industry
TikTok to Officially Launch 'Live Commerce' Feature Soon

Famous influencers are selling products through TikTok and Naver's (right) 'live commerce'.

[Asia Economy Reporter Buaeri] While domestic IT companies such as Naver and Kakao are fiercely competing in the 'live commerce' battle, the global short-form platform 'TikTok' is entering the fray. Live commerce, which allows real-time communication between sellers and buyers online, has rapidly emerged as a core shopping business in the IT industry since COVID-19.

TikTok "Testing Live Commerce"

According to the IT industry on the 7th, TikTok is preparing to officially launch live commerce features in South Korea. TikTok’s Chinese service, ‘Douyin,’ has already established live commerce, generating tens of billions of won in daily sales. A TikTok representative stated, "We are conducting tests for the official launch while running beta services of live commerce domestically."

Last December, TikTok experimented with live commerce in collaboration with Hyundai Department Store and Laura Mercier. Three famous TikTokers visited the Laura Mercier store after the department store closed and broadcasted their cosmetic shopping live. During the live broadcast, if viewers wanted to purchase products, they were linked to the Naver Shopping page for purchase. Although it currently connects to external pages, once officially launched, shopping and payment functions are expected to be integrated within TikTok. TikTok is also preparing to launch live commerce features in the United States.

TikTok is a social networking service (SNS) with 800 million users worldwide, experiencing explosive growth as short-form content gains popularity mainly among the MZ generation (born early 1980s to early 2000s). According to Mobile Index, TikTok’s monthly active users (MAU) in South Korea reach 3.92 million. Given the strong purchasing power of the MZ generation, the industry expects TikTok’s live commerce influence to be significant.

Heated Naver and Kakao ‘Live Commerce War’

Domestically, Naver and Kakao have already joined the live commerce race early on. Although still in the early stages, growth is rapid. Naver’s ‘Shopping Live’ surpassed 100 million cumulative views within six months of its launch and exceeded 170 million views as of last month. The cumulative number of live content reached 35,000, and the cumulative number of buyers reached 1.7 million. A Naver representative said, "Offline small and medium-sized enterprises (SMEs) struggling due to COVID-19 are overcoming the crisis through online sales via Shopping Live."

Kakao increased accessibility to live commerce by adding a ‘Shopping’ tab in KakaoTalk. When entering shopping in KakaoTalk, ‘Shopping Live’ is immediately displayed at the top right. Kakao’s Shopping Live is also performing well, surpassing 30 million cumulative views. Thanks to the success of Shopping Live and others, Kakao Commerce recorded sales of 573.5 billion won and operating profit of 159.5 billion won last year, an increase of 94% and 110% respectively compared to the previous year.

IT companies are entering the live commerce business due to the market’s growth potential. Han Seong-sook, CEO of Naver, said, "We are conducting the (live commerce) business with the determination to create a new market every day," adding, "We will not miss global trends and will nurture it as a new growth engine for shopping." According to Kyobo Securities, the domestic live commerce market size is expected to grow from 400 billion won last year to 10 trillion won in 2023. Especially, IT companies have traffic, video production and broadcasting infrastructure, and payment services, making it easier to dominate the market.

Kim Han-kyung, a researcher at Kyobo Securities, predicted, "Middle-aged and older generations accustomed to home shopping have newly entered the online shopping market due to COVID-19, and younger generations tend to shop through videos," adding, "Even after the end of COVID-19, demand for live commerce will continue to grow rapidly."