Seller-Friendly Policy at the Forefront
Co-Growth of E-Commerce Business
Amid the T-Mef incident bringing seller coexistence on e-commerce platforms into focus, Naver's fast settlement and free exchange and return support are gaining attention. Compared to other companies, Naver not only shortened the settlement cycle but also took a seller-friendly policy stance by supporting exchange and return costs, which are generally borne by sellers. It is analyzed that through this, Naver is nurturing the seller ecosystem and expanding its commerce business.
Naver’s Fast Settlement Cycle Supports Smooth Cash Flow for Sellers
On the 13th, Naver announced that the cumulative amount of settlement funds advanced through its Fast Settlement service has reached 40 trillion KRW. Since November 2020, Naver has been providing a free Fast Settlement service that settles 100% of the payment within about three days after payment and the day following the start of delivery. Assuming that the settlement amount of 40 trillion KRW was treated as an advance settlement loan of the same scale, the financial cost reduction effect for small business owners amounts to approximately 180 billion KRW.
The settlement cycle is a crucial factor in the cash flow of platform sellers. With fast settlement, sellers can smoothly rotate their funds, allowing them to secure inventory or increase the number of product items, thereby expanding their business scale. It can also be used as funds to cover ongoing costs such as purchase payments, labor costs, and rent. From November 2020 to July this year, about 120,000 small business owners used Naver Pay’s Fast Settlement service. Of these, 93% are classified as micro and small businesses.
Naver’s Fast Settlement system has the shortest settlement cycle domestically and is faster compared to global players. For example, Coupang, the number one e-commerce company in Korea, settles direct purchase products in 60 days, and open market payments take up to two months to be fully paid. Musinsa settles based on confirmed purchases from the 1st to the end of each month on the 10th of the following month. Additionally, T-Mef, which faced issues with its settlement cycle, is known to pay settlements after more than two months at the longest.
Support for Product Return and Exchange Shipping Costs
Since May, Naver has been supporting free exchange and returns for sellers participating in the Naver Arrival Guarantee program. By covering the cost of 'Return Care' for Arrival Guarantee products, both buyers and sellers can enjoy free exchange and returns without bearing the round-trip shipping cost of 7,000 KRW (3,500 KRW each way). 'Return Care' is an insurance service that compensates buyers for free exchange and return shipping costs.
In open markets, it is common for sellers to bear the shipping costs for product exchanges and returns. Sellers who must provide free exchange and return services face costs related to shipping and inventory burdens, which can reduce profitability or affect business viability, especially for small businesses. On the other hand, free exchange and returns reduce the risk of disputes with buyers, aiding sales activities. This also influences consumer purchase decisions, resulting in increased sales. As of April this year, smart stores using 'Return Care' saw a 21% increase in transaction volume compared to the same period last year when the service was not used.
Solving Seller Concerns for Mutual Growth in Commerce Business
Since the mid-2010s, Naver has promoted seller-friendly policies. This is also linked to the growth of Naver’s commerce business and ecosystem expansion. When Naver’s win-win program, Project Flower, started, the plan was to create 10,000 online startups annually, but currently, about 600,000 entrepreneurs have gathered on the Naver platform, greatly exceeding the target.
Naver’s support programs focus on practical assistance needed by sellers, directly contributing to their business growth. According to the Naver Digital Ecosystem Report, 98% of businesses responded that Naver’s Fast Settlement was helpful. The reasons cited included improved cash liquidity and enhanced operational efficiency. Additionally, more than 70% of all Arrival Guarantee sellers have completed free return settings.
Since last year, Naver has continued new win-win experiments by launching programs such as 'Brand Launcher,' which supports sellers’ sustainable growth and branding strategies. According to Naver’s earnings announcement on the 9th, Naver Commerce’s revenue recorded 719 billion KRW, a 13.6% increase compared to the same period last year, showing resilience in the sluggish e-commerce market. Naver Commerce’s transaction volume exceeded 12 trillion KRW per quarter.
Choi Soo-yeon, CEO of Naver, said at the earnings conference call, "Compared to other businesses, we have secured a solid position through a seller-friendly ecosystem and user traffic that are far ahead, and our growth rate continues."
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