Mid-Next Month Launch
Sequential Expansion of Product Categories from Daily Necessities, Beauty, to Digital
Subscription Solution Tool Provided to Smart Store Sellers
Subscription Economy Domestic Market Size 40 Trillion Won
Competition Among Naver, Kakao, and Coupang
Naver is introducing a subscription system to its shopping business. As the era of the ‘subscription economy’?where products are conveniently delivered regularly?opens, major domestic IT giants are swiftly entering the market. Kakao also launched its subscription platform ‘GudokON’ last month, setting the stage for a three-way competition in the online shopping subscription market among Naver, Kakao, and Coupang.
‘Subscription’ on Naver Shopping
According to Naver on the 30th, starting from mid-next month, users will be able to use a subscription service to receive products regularly. A ‘Subscription’ button will appear at the purchase stage for eligible product categories, which include daily necessities, food, kids, beauty, digital, health, and flower delivery. The range of products will be gradually expanded in the future.
Naver plans to strengthen its competitiveness in the subscription market by combining various product databases (DB) and technologies, and by enhancing integration with its membership services. Beyond daily necessities, Naver will offer an expanded subscription experience based on its wide range of products such as flowers, supplements, baby food, and side dishes. It will also improve search filters and service displays to increase accessibility and convenience for users. Leveraging its unique artificial intelligence (AI) technology and data, Naver aims to advance its technical solutions to recommend subscription products tailored to customers’ subscription patterns and preferences.
To this end, Naver will provide a new ‘subscription solution’ tool to Smart Store sellers. The ‘subscription solution’ has been added to the ‘merchant solution’ technology that supports sellers’ online commerce processes. This system allows Smart Store sellers to utilize features such as prior customer notifications, automatic payments, and delivery cycle settings. Sellers who previously had to manually respond to subscription delivery requests or lacked the capacity to operate subscription delivery businesses will now be able to manage subscription delivery operations.
The system Naver applies differs from the typical subscription model where distributors or platforms purchase sellers’ products and provide direct subscription delivery. Instead, sellers can customize their subscription delivery system according to product consumption cycles, customer characteristics, and store operation conditions. A Naver representative explained, "Sellers can enjoy business growth opportunities through the subscription model by securing fixed revenue from subscription deliveries, attracting subscription members, and gaining marketing opportunities."
Competition with Kakao and Coupang
Kakao also launched its subscription platform ‘Gudok ON’ last month, utilizing ‘KakaoTalk.’ Users can access subscription services within KakaoTalk without installing a separate app. Gudok ON offers a variety of subscription products, including goods like food, electronics, and daily necessities, as well as intangible services such as cleaning and laundry. A key strength is its integration with other services within KakaoTalk, enhancing user convenience. Payments can be made via KakaoPay, and delivery information is notified through KakaoTalk.
Coupang has long offered subscription delivery services, regularly delivering daily necessities such as bottled water on desired dates. Coupang also provides a subscription service called ‘Rocket Wow Club,’ which, for just 2,900 KRW, allows users to enjoy free shipping regardless of purchase amount, same-day delivery, and dawn delivery services.
Naver and Kakao are entering the subscription economy market due to its growth potential. According to KT Economic Management Research Institute, the domestic market, including rentals, grew from 25.9 trillion KRW in 2016 to 40.1 trillion KRW last year, an increase of over 50%. The biggest advantage of the subscription economy model is the generation of regular income. Sellers can secure a cash cow (steady cash flow), and Naver and Kakao can expect a ‘lock-in effect’ by binding platform users through subscription services.
Lee Yoon-sook, CEO of Naver Forest CIC, said, "With a diverse product DB of over one billion items, users’ desired purchasing methods vary greatly. We will expand the scope of the subscription economy by providing sellers with the benefits of the subscription model, which meets more users and secures opportunities for sales growth, while also offering users new shopping value."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
