"Altesch, Let's Have a Match"... Coupang vs Shinsegae, Diverging Membership Strategies

Coupang Raises Monthly Fees, Followed by Shinsegae and Naver Adjustments
Annual Fee Cuts and Free Promotions as First Half Strategies
Securing Loyal Customers to Counter C-Commerce Ultra-Low Price Assault

Domestic e-commerce giants have begun revamping their membership programs in preparation for full-scale competition with Chinese e-commerce companies such as AliExpress, Temu, and Shein. They plan to secure loyal customers by offering significantly enhanced membership benefits to counter the 'ultra-low price' offensive of C-commerce. However, the differing membership strategies of the three domestic e-commerce companies have drawn attention to their future success or failure.

According to industry sources on the 16th, Gmarket, an e-commerce company affiliated with the Shinsegae Group, will lower the annual fee for new members of the group's integrated membership, Shinsegae Universe Club, from 30,000 won to 4,900 won starting next month. This promotion is timed to coincide with the company's largest shopping festival of the first half of the year, 'Big Smile Day,' and targets new customers who have never joined the Shinsegae Universe Club.

The Shinsegae Universe Club offers purchasing benefits across six affiliated companies, including Gmarket, E-Mart, Shinsegae Department Store, Shinsegae Duty Free, Starbucks, and SSG.com. Members receive four 12% discount coupons and unlimited 5% discount coupons every month. A distinctive feature is that paying the 30,000 won annual fee grants immediate cash-equivalent benefits worth 30,000 won. New members joining during next month's promotion will also receive reward points equivalent to the 4,900 won annual fee. Additionally, Gmarket plans to offer a one-year free membership extension to customers who join during the event period next month.

Naver is running a three-month free promotion for its Naver Plus Membership until the 31st of next month. Naver Plus Membership provides up to 5% point accumulation benefits in shopping, reservations, and travel categories. It also offers digital content options such as TVING and SPOTV NOW, as well as offline discounts and point accumulation benefits at convenience stores and movie theaters. This promotion targets customers who have not subscribed to the membership within the past six months. Furthermore, Naver plans to provide a daily shipping discount coupon (3,500 won) usable on purchases over 10,000 won for products tagged with 'Naver Arrival Guarantee' to all membership users until July 15.

The changes in membership benefits by Gmarket and Naver came shortly after the domestic e-commerce giant Coupang announced plans to raise its paid membership monthly fee from the current 4,990 won to 7,890 won. This has led to analysis suggesting that competitors hurriedly enhanced their membership benefits to retain customers potentially leaving Coupang.

A view of a Coupang logistics center in Seoul [Image source=Yonhap News]

Some interpret these moves as countermeasures targeting Chinese e-commerce platforms like AliExpress and Temu, which are steadily increasing their market share in the domestic market. As the Chinese e-commerce offensive, emphasizing ultra-low prices, intensifies, domestic companies aim to counterattack by securing loyal customers. Indeed, Coupang's increase in the Wow Membership monthly fee is also intended to secure investment capacity in preparation for full-scale competition with AliExpress and others.

It is still too early to determine the success or failure of the differing membership strategies of the three domestic e-commerce companies. However, Gmarket and Naver, which have lowered membership prices or increased benefits, are considered to have gained an early advantage. Since Coupang announced the Wow Membership price increase, there has been growing sentiment among loyal customers to cancel their memberships. "With persistent high inflation, consumers have become increasingly sensitive to prices," said an industry insider. "Due to Coupang's fee increase, Shinsegae and Naver are expected to gain a reflective benefit."

There is also speculation that the impact of Coupang's membership fee increase will be minimal. When Coupang raised its monthly fee from 2,900 won to 4,990 won in December 2021, member churn was not significant. On the contrary, Coupang's membership grew from 9 million to 14 million over two years. Moreover, with the expansion of a nationwide logistics network in the mid to long term, membership numbers are expected to increase again. Coupang stated, "We will continue to expand Rocket Delivery services for residents living in 'food deserts' such as remote island and mountainous areas," adding, "Our goal is to expand free Rocket Delivery to most regions nationwide by 2027."