Naver, Shinsegae to open online luxury goods store
French fashion brand Louis Vuitton's pop-up store at Shinsegae Department Store in Gangnam, Seoul, last Aug. 3. Courtesy of Shinsegae Department Store
By Kim Jae-heun
Naver and Shinsegae International plan to launch an online luxury boutique in June or July this year, seeking to gain an edge in the highly competitive e-commerce sector.
Naver told local analysts recently that it aims to open 1 million shops on its Smart Store shopping platform and account for up to a 30 percent share of the local e-commerce market over the next four years. Naver Shopping's share of the local e-commerce sector stood at 17.4 percent last year.
Naver said it anticipates demand for luxury goods to continue rising in Korea. The luxury goods sector was the least affected by the COVID-19 pandemic in Korea, with the country's top retailers ― Shinsegae, Lotte and Hyundai department stores ― reporting better-than-expected revenue results.
Shinsegae, which owns Korea's largest importer of luxury goods ― Shinsegae International ― is teaming up with Naver to sell more luxury goods through the country's dominant web portal. Shinsegae International imports global brands such as Maison Margiela, Diesel and Chloe.
According to NH Investment & Securities, 15 percent to 17 percent of total luxury goods sales in Korea were conducted online last year. The brokerage expects the rate to continue to rise until 2025.
Specifically, Naver is hoping the partnership with Shinsegae International will help strengthen its competitiveness in four major business areas ― advertising, e-commerce, fintech and logistics ― as the Shinsegae affiliate has strengths in terms of its abundant luxury product lineup.
“The fashion retailers' biggest concern is how it can streamline its logistics system. Naver could solve this issue by providing fulfilment platforms for the retailer to focus on selling selected items and marketing them,” an industry source said.
Plus, Naver and Shinsegae are planning to combine their membership systems, according to sources involved with the matter. Both Naver and Shinsegae officials said some decisions have already been made regarding the possibility of the membership system integration. If it actually happens, the membership integration could let Shinsegae customers use their earned shopping points to save money when purchasing products on Naver and vice versa.
Shinsegae hopes its alliance with Naver will help lead to an increase in gross merchandise value. Its online business has been trapped within a range of 4 trillion won in annual revenue.
On a related note, Naver and Shinsegae-affiliated E-mart, which is the country's top discount store operator, agreed recently to swap stocks valued at 250 billion ($221 million). At the time of the agreement, Naver said it will purchase 100 billion won worth of Shinsegae International stocks, gaining a 6.85 percent stake.