[Asia Economy Reporter Jo In-kyung] Shinsegae Group has rapidly emerged as a major player in the domestic e-commerce market after being selected as the preferred bidder for the acquisition of eBay Korea. With Shinsegae participating in the acquisition alongside Naver, the strongest e-commerce alliance in Korea is expected to be formed.
According to investment banking (IB) and distribution industry sources on the 16th, the U.S. eBay headquarters decided at a board meeting the previous day to select Shinsegae Emart as the final acquirer of eBay Korea. The sale price is reported to be around 4 trillion KRW.
As a result, Shinsegae has laid the groundwork to quickly rise to second place, overtaking Coupang, following Naver, the number one in e-commerce.
Betting on the Acquisition with Naver
Earlier, only Shinsegae (Emart) and Lotte Group (Lotte Shopping), two major rivals in distribution, participated in the final bid for eBay Korea held on the 7th. Industry sources say Shinsegae offered about 4 trillion KRW, while Lotte proposed an amount in the low 3 trillion KRW range.
Originally, eBay headquarters had valued eBay Korea at up to 5 trillion KRW. Although Shinsegae’s offer of 4 trillion KRW fell short of this, it was several hundred billion KRW higher than Lotte’s bid, securing the winning position.
Moreover, Naver joined Shinsegae’s bid for eBay Korea on the condition of acquiring more than 20% of eBay Korea’s shares. From Shinsegae’s perspective, this means securing approximately 800 billion to 1 trillion KRW in funding through Naver.
Shinsegae had previously formed a strong alliance with Naver through a 250 billion KRW equity swap in March, and now, by forming a consortium for the eBay Korea acquisition, the cooperation between the two companies has been further solidified.
On the other hand, Lotte Group competed with Shinsegae until the last moment but acknowledged that it failed to succeed in the acquisition due to a more conservative approach in terms of price. A Lotte Shopping official explained, "During the due diligence process for acquiring eBay Korea, we found that the expected synergy with our company was not as significant as initially anticipated, and additional investments and market competition costs after acquisition were expected to be high, so we calculated the acquisition price from a conservative perspective."
From 7th to 2nd... The Strongest E-commerce Alliance
Last year, eBay Korea’s transaction volume was about 20 trillion KRW, accounting for approximately 12% of the estimated 161 trillion KRW domestic e-commerce market. In contrast, Shinsegae’s integrated online mall, SSG.com, recorded a transaction volume of about 4 trillion KRW.
If Shinsegae is selected as the final winner of this acquisition, the total transaction volume will reach 24 trillion KRW, making it the second largest in the e-commerce industry after Naver Shopping’s 28 trillion KRW. In terms of market share, it will rise from the existing 2.4% to 15%, surpassing Coupang (13.7%) and establishing a two-strong system alongside Naver Shopping.
The distribution industry expects that combining eBay Korea, which focuses on open markets, with Shinsegae Emart, which has nationwide offline bases, will maximize synergy based on their respective strengths.
In particular, from Shinsegae’s perspective, it can share not only eBay Korea’s 20 years of accumulated open market operation know-how, database (DB), and technology but also 14.5 million customers (Smile Pay members) and 300,000 sellers. Shinsegae plans to establish an integrated membership program encompassing Naver, Gmarket, Auction, SSG.com, Shinsegae Department Store, and Emart in the future.
However, there are concerns that without a long-term strategy, this could lead to a "winner’s curse." Additional investments will be inevitable to respond to the rapidly changing e-commerce market trends and to compete with industry leaders like the rapidly growing Coupang.
An industry insider pointed out, "Just as eBay Korea operated Auction and Gmarket separately without easily integrating the platforms after acquiring them in the past, even if Shinsegae acquires eBay Korea, the process of integrating it with existing businesses
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