 Employees of We Make Price, a social commerce business, show the application it has launched for smartphone users. |
Social commerce businesses are embracing the growth potential in the mobile sector, applying location based services to magnify both their presence and profit.
The idea of social commerce, where a product or a service is sold cheaply as long as a large number of people agree to purchase at the same time, has captivated both consumers and sellers. At first, shoppers loved anything sold at half price and merchants couldn’t wait for the customers to come flocking in and spend more money.
But now the conventional model of social commerce has hit a ceiling. Offers vary little from the deal of the day at supermarkets and shopping malls. Recently, traffic at the country’s top social commerce sites has been stagnating from overheated competition slowly chipping away at the market. To revive the situation social commerce businesses began offering discounts at their own expense. A survey by the Korea Chamber of Commerce and Industries on shops that held a social commerce event showed over half of them reaping no profit increase afterwards.
Now, social commerce businesses have determined that location based services are the way forward. Every IT venture is seeking to couple their business with smartphones, users of which have surpassed 15 million, but social commerce benefits from more opportunities there than other companies.
Ticket Monster and We Make Price, the country’s leading social commerce firms, launched smartphone applications utilizing location based services last month. Coupang, rounding out the top three, also plans to launch a similar service soon. With an app already in place, Groupon Korea plans to strengthen the service focusing on location.
Previously used mainly in apps for maps or transportation information, the information of a person’s location is being applied to mobile social commerce. The apps provide discount information offered at the shops nearby the user, encouraging convenient and effective advertising.
They offer real time discounts on smartphones and users are more likely to visit the shop as they are only a few steps away. TiMon Now, the mobile application of Ticketmonster lets the shops submit how many of which products they will sell at how much of a discount, and when. They can hook consumers nearby at the specified time they choose. This solves the problem of traditional social commerce, where shops were often overwhelmed by customers flooding in together at the same time. Service ended up being poor, causing disappointed customers and bad press, unexpected and unwanted for the affected shops.
There are a great many possibilities here. The KT Research Institute estimates that the mobile market could reach 620 billion won this year, from 350 billion won the year before, and mark an average 50 percent annual growth to reach 2.65 trillion won in 2015.
Portals and mobile carriers are also ogling the market. Daum Communications, which operates the major portal Daum, plans to add social shopping to the Store View application launched a month ago. The map service shows the inside of a shop and what’s available as well as offer coupons. LG Uplus, the smallest mobile carrier, has set up the social shopping service DingDong, which urges users to visit franchised shops. They earn mileage points for each visit, which can be used at participating shopping malls.
“The development of the mobile sector combined with the wide use of smartphones will catapult the mobile social commerce platform to replace preceding methods. The result will be more people-oriented,” according to a KT Research Institute report.
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