Shinsegae's personnel reshuffle of e-commerce units unlikely to turn tide, employees say

Shinsegae Group Chairman Chung Yong-jin speaks during an event to celebrate the completion of new employees’ training in Seoul, Feb. 23. Courtesy of Shinsegae Group

Gmarket CEO Chung Hyung-kwon, left, and SSG.com CEO Choi Hoon-hak / Courtesy of Shinsegae Group

Shinsegae Group is unlikely to take a drastic turn for the better with the latest reshuffle of top management, as the firm's struggling e-commerce units still require fundamental reforms to compete with Coupang and Chinese e-commerce rivals, according to company officials Monday.

Last week, the retail powerhouse nominated former Alibaba Korea head Chung Hyung-kwon as the new CEO of Gmarket. Chung is a finance expert, having worked for Coupang as an executive. The money-losing online shopping arm of the group suffered an operating loss of 32.1 billion won ($23.11 million) in 2023.

The group also replaced the head of SSG.com, its e-commerce affiliate. Under the reshuffle, Choi Hoon-hak, a former vice president at the company, was promoted to be the new chief for SSG.com. The company has reported an accumulated loss of more than 450 billion won over the past five years.

Their weakening presence is attributable to toughening market competition amid the stunning rise of Coupang, AliExpress and Temu. According to data from market tracker Wiseapp Retail Goods, Coupang was the most popular shopping app in Korea, with the number of its monthly active users (MAU) reaching 8.3 million in May. AliExpress came in second. Gmarket placed its name as the fifth-most-popular shopping app with 5.67 million MAU.

Officials from the nation's retail companies remained pessimistic that the two online shopping arms from Shinsegae will be able to achieve any meaningful rebound anytime soon through the latest reshuffle of top management.

"It needs to carry out thorough and radical reforms in its business structures to secure core competitiveness against the toughening rivalry from emerging players," an official from a retail firm here said on condition of anonymity. "The personnel reshuffle is seen as part of the group's willingness to present an air of atmosphere for change, but this is not enough."

Another official from the retail industry also pointed out that Shinsegae is urged to make bolder decisions so as to survive in the hyper-competitive domestic retail industry.

"Customers have found fewer attraction points when using Shinsegae's e-commerce platforms, compared with Coupang and AliExpress," the official said. "Coupang achieved rapid growth with its ultra-fast delivery, and AliExpress also achieved robust growth with its price competitiveness. But there aren't any outstanding selling points for Gmarket and SSG.com. The two struggling e-commerce affiliates will not be able to steal customers away from rivals without drastically reshaping their overall business strategies."