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Tue, August 9, 2022 | 06:54
Companies
Amazon breathing down G-Market's neck
Posted : 2015-01-29 16:30
Updated : 2015-01-29 21:40
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By Park Si-soo

Amazon, the world's biggest online retailer, is set to expand its presence in Korea with the company recently signing a contract to lease a sizable office in Yeoksam-dong, southern Seoul.

Amazon Korea currently has a small office there, with Yum Dong-joon, the former CEO of Google Korea, supervising its domestic business. The company currently offers cloud computing services in Korea, but there are no clear signs it will launch e-commerce services here anytime soon.

Amazon Korea's new office space is located at GS Group's headquarters. Sources say it has leased part of the 12th and the entire 13th floor ― each floor is capable of accommodating up to 300 people. The leased spaces are now being renovated.

Some industry insiders see this as the online retailer moving toward launching e-commerce services in Korea, which, if true, will pose a grave threat to existing e-commerce service providers such as G-Market and Ebay.

Amazon Korea also formed a partnership with domestic mobile carriers in September to expand its Internet data storage.

"There is a whirlwind of rumors about Amazon's expansion of e-commerce business into Korea. But there is no concrete proof backing them," an e-commerce industry insider said. "The new lease could be seen as evidence though."

Another insider said it's still too early to give a clear answer.

"I think the lease is to expand cloud computing services, not to launch e-commerce services," he said. "Above all, the size of the leased space is too small considering that hundreds of computer engineers and other supporting officials are needed to run an e-commerce website."

Most major e-commerce websites in Korea have more than 1,000 employees.

"I don't rule out the possibility that Amazon will expand the space gradually. But online retailers normally start business in foreign countries with a big office to draw people's attention, not with a small one that expands gradually."

The most feasible scenario, he said, is that Amazon would expand its existing cloud computing services.

Amazon Korea was not immediately available for comment when contacted by The Korea Times.

Rumors suggest that Alibaba is recruiting from existing online companies to set up a presence here, but that has not been confirmed by the company. Its spokesman recently said it has no immediate plans to branch into the market.

"We see big growth potential for the Korean market, but we have no immediate plans to expand into Korea," a spokesman for Alibaba said earlier this month in response to claims the company will make a 1 trillion won-worth investment in Incheon.

Incheon previously said it was engaged in negotiations with Alibaba over a joint investment to host an "Alibaba Town," which will have a five-star hotel, warehouses, shopping malls and other entertainment facilities.

Many experts say it's only a matter of time for the Chinese company to have a large business presence here, as it is being pressed by the Korean government to do so.

Finance Minister Choi Kyung-hwan visited Alibaba Group's headquarters in Hangzhou, Wednesday, and asked its leader Jack Ma to invest in Korea.

"Choi said with Alibaba's ongoing strategy to expand its presence in the global market, it makes sense to increase cooperation with South Korean companies," the finance ministry said in a statement. "Ma showed interest in the 200 billion won cultural fund that Seoul and Beijing want to set up to facilitate exchanges in the cultural sphere."

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