Kakao may acquire 29CM, Musinsa or Grip
Kakao Founder Kim Beom-su / Courtesy of Kakao
By Kim Jae-heun
Kakao, which operates the largest mobile messaging app in Korea, may consider taking over younger e-commerce platforms like 29CM, Musinsa or Grip after deciding to drop out of the bid for eBay Korea.
Although Kakao said it is not reviewing any type of acquisition deal at the moment, it is still very interested in expanding into the e-commerce business and is searching for new products to sell.
Contrary to expectations, Kakao did not take part in a preliminary bid earlier this month for the third-largest e-commerce firm active in the country, even though the acquisition would have put the messaging app in direct competition with Coupang and Naver.
EBay Korea owns e-commerce affiliates Auction and Gmarket, which focus on offering better prices or faster delivery services. Their main customers are people in their 30s and 40s who have proven to be avid online shoppers.
However, Kakao's commerce business centers on mobile messenger platform Kakao Talk. The app's 46 million monthly active users (MAU) naturally flow into Kakao's online shopping pages, such as “Gift sending” or “Talk deal.” Kakao wants to partner with relatively young companies that can create synergy with its mobile based e-commerce platform.
Medium-sized businesses such as 29CM, Musinsa and Grip are mentioned as strong candidates. Their marketing strategy is similar to that of Kakao's by offering brand new products that are not well-known to the public, while providing a space online for customers to share their shopping experiences.
The main customers of Style Share, the parent company of 29CM, are part of Generation Z, or “zoomers,” born between 1996 and 2010. The e-commerce firm encourages active discussions of shopping experiences in its online communities. The platform was launched in June 2011 and it acquired 29CM three years ago.
Musinsa is one of the largest online shopping malls here with over 8 million members as of February and some 5,700 brands sell their apparel on the platform. In 2019, Musinsa's annual gross merchandise value (GMV) stood at 900 billion won.
Grip is the country's very first live-commerce mobile application. The service was launched in February 2019, but in just two years it has accumulated GMV surpassed 24 billion.
The COVID-19 pandemic has boosted the trend toward online consumption and there has been a surge in the number of shoppers starting to use Grip to communicate with sellers in real time. As of last December, about 8,200 dealers were selling their products on Grip.
Due to a flourishing online business, the three companies' enterprise values have been soaring. Musinsa's enterprise value is estimated at 2.5 trillion won to become the priciest company among the three, followed by Style Share with an enterprise value of 200 billion won and Grip's 50 billion won.