[W Forum] New Distribution Innovation, 'Live Commerce' Regulations Should Be Approached Cautiously

Food, clothing, and shelter are the basic elements of human survival. In any political system, achieving abundance in these essentials guarantees the support of the people and the stability of the regime. In this context, the recent surge in real estate prices can be fatal to the regime’s maintenance by amplifying public anxiety over 'shelter,' a fundamental survival need. The apartment where the author resides has also skyrocketed in price by several hundred million won in just over a year since the lease contract, making every day a sigh.

However, 'clothing' and 'food' can be purchased cheaply and conveniently even amid COVID-19. In the past, offline-centered distribution structures such as large retail chains and traditional markets limited producers’ opportunities to enter and restricted consumers’ access to a variety of products and prices. Online shopping is breaking down these barriers. Even when buying a single T-shirt, consumers can access a wide range of products from dozens of vendors and easily compare prices. This distribution innovation has expanded business opportunities for small and medium-sized merchants and, as a result, enhanced consumers’ diverse choices.

In particular, 'live commerce' has been rapidly growing recently. It is favored by small and medium-sized merchants because live broadcasts can be conveniently conducted with just a smartphone, without the need for a separate studio or professional equipment. TV home shopping is operated mainly around large corporations’ products, making it difficult for small businesses to enter. However, as of January, 80% of all sellers on Naver’s representative live commerce platform 'Shopping Live' are small and medium-sized enterprises. Live commerce provides crucial customer acquisition opportunities for small businesses struggling due to prolonged contactless conditions.

'Meat Studio,' which sells Korean pork and beef, conducts live shopping about 30 times a month, and 'Jenny Edition,' which sells Dongdaemun fashion products, holds about 20 live sessions monthly, increasing sales nearly tenfold within 2 to 4 months and growing their loyal customer base. 'Monotime,' a fashion store operator in Geumsan, Chungnam, conducted seven live sessions in a month, generating sales of 42 million won, and a producer from Ga-pyeong Goam Apple Farm recorded sales exceeding 80 million won with a total of 3,500 boxes sold through Shopping Live. During last year’s flood disaster, they also actively promoted regional cooperation by partnering with Seoul’s Sangsaeng Sanghoe to introduce agricultural products from flood-affected farms through special live broadcasts. The domestic live commerce market is actively participated in not only by domestic operators such as Coupang, Gmarket, Naver, and Kakao but also by global platforms like Facebook (Instagram), TikTok, Amazon, and Google (YouTube).

Live commerce is subject to the Act on Labeling and Advertising if it involves false, exaggerated, unfair comparisons, deceptive, or defamatory advertising. Additionally, according to terms of use or operational policies, if live content includes false or exaggerated advertisements, measures such as suspension of broadcasting, restriction of replay exposure, or deletion of videos can be taken. Corrections or sales bans on problematic products can also be enforced, and sellers may face suspension or contract termination. These regulations are necessary to protect consumers.

Some argue that live commerce should be subject to obligations such as programming regulations, broadcast review regulations, and fund support similar to TV home shopping. However, this is not appropriate. TV home shopping and live commerce differ in nature. TV home shopping is a broadcasting business that uses scarce public resources such as frequencies, allowing only a limited number of licensed operators to enter. Live commerce is based on the internet, which is not a scarce resource like frequencies. If the same regulations applied to live commerce as to TV home shopping, the management costs for live commerce operators would increase, reflected in entry fees, limiting the use by small businesses with high risks. Unreasonable and excessive regulations should not extinguish the spark of hope for small and micro merchants that has just begun to ignite.

Hyunkyung Kim, Professor, Graduate School of IT Policy, Seoul National University of Science and Technology