WeMakePrice reignites competition with Coupang

Kim Jung-ju chairman of Nexon

By Park si-soo

WeMakePrice, Korea’s second-largest social commerce website, has attracted significant investment from online game mogul Kim Jung-ju, chairman of Nexon, reigniting competition with Coupang for market leadership.

Industry sources say Kim is holding last-minute negotiations with WeMakePrice over his investment of 100 billion won ($83.78 million) in exchange for a 10-15 percent stake in the unlisted online retailer. Currently Huh Min, the WeMakePrice founder, holds a 100 percent stake in the company.

“The two have reached an agreement broadly. Now they are negotiating over the details,” an industry insider said.

A WeMakePrice spokesman declined to comment, saying, “There is nothing to confirm.”

It’s still uncertain what the company will do with the money. But it’s widely believed that WeMakePrice will spend it boosting its core competitiveness to challenge Coupang’s leadership.

The two online retailers have had a neck-and-neck race for years with little difference in services and products they provide.

Coupang upset the balance by attracting a $100 million investment from Sequoia Capital, a U.S. venture capital firm, in May 2014 and two other notable investments in recent months ― $300 million from U.S. asset manager BlackRock in December 2014 and $1 billion from Japanese IT behemoth Softbank in June of this year.

Cash-rich Coupang duly launched an ambitious door-to-door delivery service, as well as discount and other promotional campaigns to cement its leadership. The door-to-door delivery service is available in Seoul and six other big cities, and will become a nationwide service in the years to come.

The envisioned investment into WeMakePrice is small, compared with the combined investment into its biggest rival. Nevertheless, analysts say the deal is meaningful in that it gives WeMakePrice a chance to catch up with or overtake Coupang.

“If WeMakePrice shows an impressive performance with the investment, it would be much easier for the company to attract additional investment,” an analyst said.

Korea’s social commerce market has grown at double-digit rates in recent years. The market is expected to expand to 8 trillion won ($6.71 billion) this year, up from 5.5 trillion won in 2014, according to the Korea Online Shopping Association.

Coupang attracted more than 13 million visitors in June alone, followed by WeMakePrice with 12.16 million and Ticket Monster with 10.28 million, according to data from Nielsen Korea, a marketing research firm.

Coupang reported 348.5 billion won in sales and a 121.5 billion won operating loss last year, while WeMakePrice reported 125.9 billion won in sales and a 29 billion won operating loss.