[Asia Exclusive] "Overflowing Startups... Cafe24 to Become an e-Commerce Hyperconnected Platform"

Connecting Customers, Payment Agencies, Developers, and Logistics Companies
'Platformization' to Make Starting Online Stores Easier
Focusing on Accelerating Growth of D2Cs
Strengthening Supply Chain Competitiveness Also a Business Goal

Jaeseok Lee, CEO of Cafe24.

[Asia Economy Reporter Lim Chun-han] Recently, in line with the trends of the 4th Industrial Revolution era such as artificial intelligence (AI), big data, and the Internet of Things (IoT), Jaesuk Lee, CEO of Cafe24, is preparing to leap forward as an e-commerce platform based on ‘hyperconnectivity.’ Cafe24 aims to become a platform that connects various stakeholders including customers, payment agencies, developers, design agencies, logistics companies, and global marketplaces, enabling anyone to start an online store more easily.

In an interview with Asia Economy on the 2nd, CEO Lee said, “Looking at the e-commerce market environment, startups with various technologies and services are emerging, and customers can easily choose the most suitable option among the services available in the market.” He added, “Ultimately, it is important to connect newly emerging and noteworthy external services well with Cafe24’s core competencies.” In other words, ‘hyperconnectivity’ is the key.

The Cafe24 platform ecosystem that CEO Lee is building aims to establish ‘Smart Contracts’ where any member can easily make contracts without complicated procedures when needed. This means that pre-agreed terms exist in computer systems or programs and can be executed immediately once certain conditions are met. CEO Lee explained, “Currently, Cafe24 Store and Design Center are representative examples,” adding, “These services easily connect customers who want to create or upgrade their direct-to-consumer (D2C) stores with agencies that produce the desired designs and additional functions.”

Cafe24’s main business and new service directions are focused on accelerating the growth of D2Cs. In particular, they plan to strengthen Cafe24 MarketPlus, which helps online brands expand their transaction volume. MarketPlus is a service that allows online brands to easily link and expand sales on major global marketplaces such as Coupang, Naver Smart Store, Amazon, and Rakuten.

Although Cafe24 experienced a decline in performance due to the impact of COVID-19, it plans to solidify its foundation again starting this year. Last year, Cafe24’s transaction volume reached 13 trillion won, and sales grew to 280 billion won, but it recorded an operating loss of 19.9 billion won. CEO Lee said, “While it is somewhat regrettable to record an operating loss, I believe the direction and business model Cafe24 is pursuing are solid,” and added, “We will prioritize projects that can create synergy with Cafe24’s core competencies, which have been honed over a long time, and focus on increasing the probability of business success.”

Cafe24 also plans to strengthen its supply chain competitiveness that supplies and distributes products sold by its customers. CEO Lee said, “Among the customers conducting business based on the Cafe24 platform, many use sourcing methods instead of producing the products they sell themselves,” and explained, “The process of bringing products to sell from somewhere is essential, and we want to connect internal and external product supply chains within our platform.”

Since entering Japan in 2018, Cafe24 has been expanding its business overseas to countries such as the Philippines and India. In Japan, the number of platform members increased fivefold compared to the previous year, and transaction volume grew by 40% last year. CEO Lee emphasized, “We have two overseas expansion models: one is the overseas direct sales division that supports excellent Korean brands to enter overseas markets, and the other is Cafe24’s platform directly entering each country to support local businesses,” adding, “Our goal is not to clearly separate the two models but to create synergy between them.”

Additionally, Cafe24 is pursuing strategic partnerships with Naver to collaborate on global e-commerce expansion and to expand marketing and logistics service support for online businesses. CEO Lee said, “Naver has the Smart Store platform and is also the largest marketing marketplace in Korea,” and noted, “Strengthening the connection between Smart Store and Cafe24-based brands is an important part of our cooperation, and since both companies are investing in technology and support for sellers’ global expansion, collaboration will also take place globally.”