Naver prepares to take on Facebook, Google in e-commerce

Naver's Membership Plus program launched on June 1 / Courtesy of Naver

By Kim Jae-heun

The country's biggest portal site Naver is trying its best to prepare for competition against Facebook and Google in the local e-commerce market.

Since Facebook announced the launch of its online shopping platform Facebook Shops in collaboration with domestic firm Cafe 24, June 22, Naver instantly improved the benefits of its membership program, raising the maximum cash dividend from 8,000 won to 20,000 won.

Naver has started a paid membership program called Membership Plus that gives a maximum 4 percentage points return on how much a customer spends in a month; 20,000 won is the largest amount a person can collect.

The portal site saw a big increase in sales after the launch of the membership program on June 1, with customers who had been spending less than 200,000 won per month tripling their transactions.

Google will also enter the local e-commerce market starting in the second half of this year by opening its shopping platform.

Last week, YouTube started the beta version of its Shopping Extension service for selected advertisers only. The feature opens up a pop-up for customers to see the price and information of a product while viewing its commercial.

Industry insiders here believes Facebook's ultimate goal is to create synergy between Instagram and WhatsApp to allow customers to search for products and make purchases on each platforms.

This is exactly what Naver is doing with its Naver Shopping and Naver Pay, which have been combined to become one shopping platform.

In this context, when Facebook Shops settles down in the local market, Naver cannot avoid to compete directly with the global IT firm.

"It was expected that Facebook and Google would enter the online shopping market here because they had no reason not to. Naver must think about its competition with not only Coupang but also with international platform operators and come up with distinguished service to survive," an industry source said.

Live commerce is one part over which Naver has a firm grasp. The portal site operates a platform called Sellective, where show hosts or influencers introduce products. The advantage of this service is that customers don't have to visit stores to purchase products and can ask questions about them in real time through online chat.

Sellective can be accessed without downloading a separate mobile application.

"The success or failure of a live commerce business depends on how accessible the platform is to customers to watch the online show. Naver has an advantage in this so it has a great chance to become a successful online shopping platform," an industry source said. "Also, it only requires a single-digit commission fee to sell a product through Sellective, which is attracting a lot of sellers to the platform."

In the last three months, the number of small businesses opened on Naver's Smart Store platform also increased by 45 percent, showing the increasing power of the portal site's influence in the e-commerce market.

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