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| Actress Youn Yuh-jung appears in an ad for fashion e-commerce platform ZigZag. Courtesy of Croquis |
By Kim Jae-heun
Major platform operators here are competing for hegemony in the online fashion market, a field that is still considered a blue ocean.
Last year, the traditional fashion market here was almost "destroyed" by the COVID-19 pandemic, but e-commerce firms in the field have shown 100 percent growth in terms of business volume.
No single player has been able to dominate this area fully ― not even the most successful e-commerce firm, Coupang ― despite such a favorable business environment.
The heated competition has led a number of major companies ― from the top men's online shopping platform Musinsa, to the biggest local luxury retailer Shinsegae, as well as IT giants like Kakao and Naver ― to acquire fashion startups with different characteristics and aim for the throne.
It started in April, with Kakao taking over the mobile fashion platform Zigzag. Then on May 11, Shinsegae acquired the leading womenswear online shopping platform W Concept. Now Musinsa is in the process of merging with e-commerce fashion firm Style Share and its subsidiary 29CM.
All three major firms have very recently spent hundreds of billions of won to secure a decent market share in the women's fashion field.
Naver was not involved in any big acquisition deals, but it made a direct investment of 10 billion won together with the Korea Development Bank in Brandi, a startup that operates a fulfilment system in the country's largest traditional fashion market and shopping center, Dongdaemun Market.
The combination of startups' know-how in the online fashion business and major firms' funding power has brought about an economic boom in the womenswear platform sector.
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| IMM Private Equity CEO Song In-jun, left, and E-mart CEO Kang Heui-seok pose during a deal closing ceremony for Shinsegae Group's acquisition of W Concept at E-mart's headquarters in Seoul on May 11. Courtesy of E-mart |
ZigZag, W Concept, 20CM and Brandi are all categorized as women's fashion platforms, but they each have distinct types of expertise and strengths.
ZigZag and Brandi sell no-brand clothes from individual sellers.
ZigZag, in particular, gathers over 4,000 dealers in its open market service provided on its mobile app.
Kakao aims to target ZigZag's loyal customers in their teens and 20s and expects its gross merchandise value to reach 1 trillion this year alone.
ZigZag is considered to be one of the top three online shopping platforms for women in their 20s, and its total value is in the highest class among fashion startups selling no-brand apparel. Brandi has the quickest delivery system that sends customers' orders in one day.
Meanwhile, W Concept and 29CM, which have been acquired respectively by Shinsegae and Musinsa, only deal with well-known fashion brands. The fashion producers deliver their products on their own and the retailers only provide their platform.
Shinsegae's strengths lie in the department store business and sourcing international luxury goods. Merging with W Concept creates synergy between the two parties by helping the retail giant to obtain the online fashion platform's new customers, while beefing up the fashion brand selection for the e-commerce startup.
Musinsa specializes in menswear, but by taking over 29CM, it is able to make up for its weakness in the much bigger womenswear market.
Style Share's main customers are teenagers and women in their 20s. The online mall has nearly 7 million members. Its subsidiary 29CM targets customers of a slightly older age group, in their 20s and 30s. The latter fashion platform is expected to contribute big for Musinsa, as it recorded a year-on-year sales increase of 71 percent in 2020. It also recorded 1 billion won in operating profit during the same period, continuing its growth trend.
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