Concern grows over Market Kurly's scheduled IPO in US

Market Kurly Founder Sophie Kim / Courtesy of Market Kurly

By Kim Jae-heun

Investors are questioning the validity of Market Kurly's planned initial public offering (IPO) in the United States after the stock price of Chinese e-commerce platform MissFresh plunged by 30 percent compared to its offering price.

Because of some similarities in their business structures, Market Kurly is often compared to Coupang. However, Coupang is an all-round online retailer while Market Kurly only focuses on the fresh food segment. It has started expanding its item portfolio in preparation to go public, but this is only a recent development.

Investors see MissFresh as a good example to predict the outlook of Market Kurly's possible debut ― either on the New York Stock Exchange (NYSE) or NASDAQ ― and the forecast for the Chinese firm is not good.

Another example could be Dingdong Maicai, another Chinese grocery application service that went public on the NYSE in June.

It delivers fresh food from its fulfilment centers established near densely populated areas. The company is failing at reducing its deficits, let alone making a profit. Market Kurly and MissFresh are in the same position. Dingdong Maicai has dropped its offering price by over 25 percent.

Coupang's corporate logo and the Korean national flag are seen on a screen in New York's Times Square after the online retailer went public in the United States in March. Yonhap

What's driving the sell-off of MissFresh's and Dingdong Maicai's stocks is their tough competitors in the Chinese e-commerce market. The two have to vie with Alibaba and JD.com, the two IT giants active in e-commerce across China. MissFresh and Dingdong Maicai mainly target customers in cosmopolitan areas of China.

Market Kurly also has to fight local e-commerce giants like Naver, Coupang and Shinsegae, the latter which acquired eBay Korea recently to become the second-largest online retailer here.

“We predict e-commerce firms to gather a 50 percent retail market share in the near future and this will lead to faster and greater investments in logistics and delivery services. This will bring many other businesses to jump into the online retail market, boosting the already-fierce competition,” IBK Securities researcher Ahn Ji-young said.

Market Kurly refuted the prediction.

“We are planning to expand our delivery service across the country within this year and our sales have been growing continuously. We are different from Chinese platforms, whose businesses are deteriorating,” a Market Kurly official said.