By Kim Jae-heun
Local e-commerce firms have decided to adopt a different strategy after learning that playing chicken was not the way to gain the initiative in the market.
The U.S. based Amazon became the top player in the online retail market after implementing an aggressive strategy that took out all its competitors.
In Korea, the current reigning player Coupang is doing the same, but others are not playing this game and are taking a different path.
Many are ensuring internal stability to prepare mid- to long-term goals to sell their companies or go public.
EBay Korea (a franchise of the U.S. giant), the only online retail firm making a continuous operating profit, is seeking to sell itself, according to local investment banks. Last year, it recorded 1.09 trillion won in revenue and a profit of 61.5 billion won.
However, it does not see a future in Korea where the competition is becoming fierce. Not only has it lost its top position to Coupang recently, but offline retail giants Shinsegae and Lotte Shopping have jumped into the online competition, in addition to Naver and Kakao which are chasing the top spot.
Ticket Monster (TMON) and 11st have chosen to pursue an initial public offering (IPO). Both players learned they cannot maintain sustainable growth without massive outside investment.
The two have changed strategies to improve their profitability and win investors for their IPOs.
11st took the initial action by reducing the issuance of free online vouchers and focusing on its main business of open market commerce. Last year, it recorded its very first profit of 1.4 billion won. It will reveal its IPO plan in the second half of this year.
TMON, on other hand, has already chosen Mirae Asset Daewoo as underwriter for its IPO. Although it has not recorded a profit on a yearly basis, it successfully decreased its operating loss of 40 billion won in 2019 and made a turnaround in March this year.
TMON has adopted a limited-time discount promotion where they offer discounts for different items every hour.
Coupang and WeMakePrice are continuing their Amazon-style aggressive marketing. They are both investing big money into their business expansion. WeMakePrice recorded an operating loss of 75.7 billion won last year, which is a 94 percent increase from the previous year. It has successfully attracted 370 billion won of investments to continue its aggressive business expansion.