Shinsegae's online fashion biz uncertain despite acquiring W Concept

By Kim Jae-heun

Shinsegae Group's e-commerce firm SSG.com has recently acquired the leading womenswear fashion platform W Concept to beef up its online fashion business.

However, considering that many e-commerce firms including Amazon are struggling to expand their fashion businesses for various reasons, SSG.com does not look it will achieve anything much different from that of its rivals.

The turnover of fashion businesses for local e-commerce firms such as Coupang, Gmarket, Auction and 11STREET is almost 10 percent of the total. This is because fashion brands are hard to manage.

Most e-commerce firms here operate open market platforms where individual dealers sell their products. However, they are not all authentic items, especially when it comes to apparel or clothing of premium and luxury brands.

The world's biggest e-commerce company Amazon also struggles with the fashion business due to the high volume of counterfeit products sold by small traders. The company failed to take stern action against it and in 2019, the world's largest sporting goods maker Nike decided to leave Amazon. This triggered other fashion brands to stop selling their products on Amazon too.

At the same time, established fashion labels do not prefer to sell their products online, especially if they are already doing well offline. Fashion is a field that is very sensitive to trends, and fashion companies do not want to do business with platforms that have no expertise in selling apparel or accessories.

Coupang, the country's most successful e-commerce firm, does not have many fashion brands active on its platform. Both Coupang and Amazon focus on selling daily necessities for their main source of revenue.

However, Shinsegae believes it is different from the e-commerce firms. The retail giant plans to create synergy between its offline and online channel utilizing the W Concept platform.

The shopping mall has its own membership of 5 million customers alone. It sells a number of local fashion brands exclusively while operating its house brand FRONTROW. W Concept has also started selling luxury items and cosmetics recently.

Shinsegae said it will hold onto workers of W Concept and give them access to its own resources. Thus, W Concept will be available to sell its products at Shinsegae Department Stores while making quick deliveries with Shinsegae's logistics service.

Shinsegae has long been importing global fashion brands and targeting customers with purchasing power. Its fashion business focuses on premium and luxury brands.

The takeover of W Concept gave Shinsegae diversified lineups of fashion brands apart from those of designer labels.

“We have secured a number of original Korean designer brands that are favorites of 20s and 30s on W Concept. In addition to high-end fashion brands, we want to be competitive with local label lineups,” a Shinsegae official said.

Meanwhile, SSG.com said last Thursday it has acquired full stocks of W Concept owned previously by IMM Private Equity and ISE Commerce. When the Korea Fair Trade Commission approves the merger deal, W Concept will officially be transferred to SSG.com.