[Click eStock] "Emart Partners with Alibaba, a Rational Decision Amid Growth Slowdown"

On the 6th, LS Securities evaluated Emart's partnership with Alibaba as a rational decision amid a slowdown in growth.

Researcher Orin A stated, "From Emart's perspective, it was a reasonable choice," adding, "The synergy between Gmarket and SSG.com is unlikely, surpassing Coupang and Naver in the long-tail e-commerce sector has become difficult, and the growth of the e-commerce market has also slowed, making it hard to expect performance improvement."

She continued, "Since Alibaba is onboarding domestic sellers in a manner similar to domestic open markets, some cannibalization is inevitable," but noted, "Simple price competition to expand market share in the current e-commerce market has lost its meaning, so Gmarket's strategy to seek growth through collaboration with Alibaba is advantageous."

Researcher Oh added, "There is a growing trend of C-commerce companies seeking overseas opportunities due to domestic stagnation, expanding their entry into Korea," and "Alibaba has succeeded in imprinting AliExpress on consumers through advertising and promotions over the past two years."

As of November 2024, Alibaba's comprehensive mall app MAU recorded 9.68 million, chasing the leader Coupang (32.2 million). The third place is 11st (8.89 million), fourth is Temu (7.33 million), and fifth is Gmarket (5.62 million).

Researcher Oh said, "(Alibaba) likely decided on this deal to secure reliability regarding the quality of products sold," adding, "Early last year, AliExpress posted job openings for fresh food MDs in Korea, indicating plans to expand into the online grocery sector."

The future stock price direction depends on the ability to defend profitability. Currently, Emart's stock price closed at 62,700 KRW on the 3rd.

Researcher Oh noted, "If Emart focuses on the grocery vertical through SSG.com and achieves stable performance improvement through advertising revenue, the e-commerce momentum remains valid," pointing out, "A notable aspect of Emart's recent performance is that despite a decline in existing store sales, operating profit decreases in discount stores, Traders, and Starbucks were limited."

She added, "In 2025, the separate segment is expected to see GPM improvement effects from integrated sourcing, and Starbucks will continue to improve cost ratios through efforts such as stabilizing coffee bean prices and reducing raw material costs for new products," further stating, "Along with this, efforts to alleviate labor cost burdens through voluntary retirement and reduce promotional expenses are ongoing, so despite delayed sales recovery, structural improvements and cost slimming effects are expected to become noticeably apparent."