Naver strengthens online business with big name brands

Naver CEO Han Seong-sook speaks during a press conference. / Korea times file

By Kim Jae-heun

The country's largest portal site Naver is opening direct management stores of popular international brands like Gucci and Disney in an effort to sharpen its competitiveness against its main rival Coupang.

Coupang has an advantage over Naver with its fast delivery service, which brings many people to buy fresh food and daily necessities there.

Naver, on the other hand, operates shopping platforms like Brand Store, where only big brands sell their products directly to customers.

The strategy is aimed at focusing on luxury goods, home appliances and cosmetics that people take time to think about and purchase, so it is not the speed of the delivery but the credibility of the firm that matters.

Naver has already opened 75 online stores of local power brands such as LG Household & Health Care and CJ CheilJedang, and plans to establish 125 more by end of this year.

However, it does not seem easy for the portal site to host other luxury brands' online stores except Gucci because none of the others have opened one yet.

The so-called “big three” luxury brands Louis Vuitton, Chanel and Hermes do not have their own online shops on Brand Store.

“We cannot comment on any specific brand store we plan to open in the near future as it is our business secret,” a Naver official said regarding if it was in talks with any of the three luxury firms for online business.

However, there is a high chance that many luxury brands will open stores on Naver as people are moving online to buy luxury items. Also, Naver charges no platform fee so luxury brands can skip costs for opening boutiques required for other retail channels.

Back in January, Naver CEO Han Seong-sook said the company would use its data to provide insights useful for sales while maximizing sales through the Brand Store platform.

The competition between Naver and Coupang in fashion is expected to become fiercer as the latter is seeking to reinforce its online fashion business.

Coupang has been a popular platform for buying groceries. According to Nielson Korea in May, female customers in their 20s mainly searched for fresh food on Coupang and fashion items on Naver.

“For Naver, it is hard to catch up to Coupang in the fast delivery service, which people use to shop for their daily necessities that need to arrive as fast as possible,” an industry insider said.

“And with Naver, people expect to purchase brands they trust and for which they are willing to pay more. In this sense, Naver has been playing the role of online department store and it has potential over Coupang in the sector.”