By Cho Jin-seo
Staff Reporter
SK Telecom said it is launching online shopping sites in Korea and China, a risky attempt to diversify its business portfolio into the retailing sector.
The company said Monday it is opening a new shopping Web site named ``11th Street'' at 11:11 a.m. today. It aims to achieve 600 billion won in trading volume this year and to be the third largest player after G-Market and Auction in the 8 trillion won market. The firm is also planning to open a Chinese shopping portal for Beijing and its vicinity later this year.
The opening of the new online shopping mall is a daunting challenge in Korea, since heated competition in the online shopping industry have forced many sites to fold their businesses over the past years. Most recently, CJ Group closed its Mple site in December after spending 40 billion won over two years. G-Market and Auction dominate the field, holding more than 80 percent of the market in total.
Chong Nak-kyun, senior vice president of Commerce Business Office, said that it will utilize its 22 million mobile phone subscribers and not follow in the footsteps of other firms that dropped out of the race.
``We are not launching it from the ground level. We have a large customer base and we have various channels to access them,'' he said during a press conference held Tuesday at Lotte Hotel in central Seoul. ``We are a company that knows how to satisfy customers.''
Called ``Internet open market'' in Korea, online auction and shopping accounted for 8.9 percent of the retailing industry last year. Gmarket and Auction are the two powerhouses with each having around a 40 percent market share, while GS Home Shopping and Daum follow with a fraction of that.
Like e-Bay of the United States, most of the open marketplaces act as a middleman, providing advertising spaces and payment solutions for tens of thousands of sellers. In return, they usually take around 5 percent of the sellers' revenue as commission.
Since CJ conglomerate quit the field last December, many in the Industry believe that the nature of the online retail business does not befit the corporate culture of conglomerates, which are considered too rigid and too slow to catch up with the fast-changing trends.
SK Telecom has been nonchalant about CJ's experience. Throughout last year, the telecom giant has bought several online shops that specialize in clothing, cosmetics, and books with a plan to converge them into the ``11th Street'' site.
A public relations official said that the name has many symbolic meanings _ 11 is the street number of the firm's headquarters in Euljiro, downtown Seoul. It also represents 011, the old prefix for SK Telecom's mobile service.
Unlike the confidence shown on the launching of the ``11th Street'' site in Korea, the firm's China project sounded less convincing. Senior Vice President Chong said that one of SK Group's subsidiaries in China will take charge, while SK Telecom will provide necessary technological platforms and manpower. The service area will be Beijing and its vicinity but details such as the format of the business and the launching date cannot be disclosed at this moment, Chong said.
``SK's most important overseas market is China,'' he said. ``The relatively poor Internet network conditions can be a problem there, so we are trying to produce a localized solution.''
indizio@koreatimes.co.kr