The survival technique of the center and decrease e-commerce corporations launched by Coupang and defeated by Alibaba is

2024-06-07 13:13:00

The sense of disaster within the e-commerce trade among the many center and decrease courses is growing daily. Its main place has been changed by Coupang and has been affected by Chinese language procuring platforms equivalent to AliExpress. Within the home e-commerce market, the remaining corporations are fiercely competing for market share underneath the 2 energy techniques of Coupang and Naver, that are main with rocket supply. Persevering with to function at a loss New World(004170) Teams (G Market, Sseok.com), eleventh Avenue, Lotte On, and so on. have entered the emergency administration system.

Cartography=Son Minkyun

◇Voluntary retirement, workplace relocation…e-commerce in disaster

eleventh Avenue, South Korea’s first-generation e-commerce firm, has voluntarily retired twice since November final 12 months and plans to maneuver its headquarters from Seoul Plaza close to Seoul Station to Gwangmyeong Metropolis, Gyeonggi Province in September. This selection was made to avoid wasting prices as constructing rents enhance.

The corporate was compelled to promote following its preliminary public providing (IPO) failed final 12 months and is now dealing with having to boost its share worth. eleventh Avenue’s gross sales final 12 months have been 865.5 billion gained, a rise of 10% from the earlier 12 months. Working loss was 125.8 billion gained, a lower of 17% from the earlier 12 months. Gross sales within the first quarter of this 12 months have been 171.2 billion gained, down regarding 21% from the earlier 12 months, and working losses have been 19.5 billion gained.

Lotte Buying (023530)E-commerce division Lotte An introduced voluntary retirement for workers on the fifth. That is the primary voluntary retirement applied since its launch in 2020. The goal group is staff with greater than 3 years of service. It’s understood that Lok Tianan performed interviews with underperforming senior managers and staff final month and advisable resignations. The corporate makes an attempt to scale back prices via restructuring.

Lotte An made efforts to enhance its efficiency final 12 months, together with utilizing prime star Lee Hyori as a mannequin. Nonetheless, little success was achieved. The corporate had an working lack of 85.6 billion gained final 12 months, and has misplaced regarding 100 billion gained yearly since its institution in 2020. Gross sales throughout the identical interval reached 135.1 billion gained, a rise of 19.4% over the earlier 12 months. Working loss within the first quarter was 22.4 billion gained. Gross sales have been 29.8 billion gained, a rise of just one.7% from the earlier 12 months.

Timon and WeMakePrice, which have been acquired by Singaporean e-commerce platform Q10, had working losses of 255.2 billion gained final 12 months. At one time, these platforms every generated regarding 400 billion gained in gross sales, however final 12 months the mixed gross sales of the 2 platforms have been solely 259 billion gained.

/ Offered by Lotte An

◇ The 2-tier system of Coupang and Naver is secure…the center and decrease courses are combating for survival

Up to now 5 years, the home e-commerce market has grown at a median annual fee of 14%, with transaction quantity reaching 166 trillion gained. The transaction quantity ranks fourth on the planet, and the penetration fee and per capita transaction quantity rank second on the planet.

Nonetheless, with the slowdown in market progress and the downturn within the funding trade and IPO market, the sense of disaster in midstream and downstream platforms has elevated. Based on an announcement from the Truthful Commerce Fee final 12 months, as of 2022, Coupang (24.5%) and Naver Buying (23.3%) account for regarding half of the home on-line procuring market by way of transaction worth, whereas Shinsegae Group operates Sseok.com and Gmarket. The corporate (10.1%), eleventh Avenue (7%), Kakao (5%) and Lotte On (4.9%) divided up the remaining market so as.

In response, the trade has proposed “enhancing profitability”. Some platforms are additionally seeing outcomes. 11st, which has been specializing in enhancing profitability and value effectivity since final 12 months, achieved an working revenue surplus within the open market sector in March this 12 months. The corporate’s purpose is to “flip total working revenue into surplus by 2025.” Morning supply platform Curly additionally reported its first quarterly working revenue in 9 years within the first quarter of this 12 months.

Shinsegae Group’s G Market additionally achieved its first revenue in eight quarters within the fourth quarter of final 12 months. Working loss within the first quarter of this 12 months was 8.5 billion gained, however the loss decreased by 22% from the earlier 12 months. Sseok.com’s working loss within the first quarter was 13.9 billion gained, a lower of roughly 11% from the identical interval final 12 months.

Shinsegae-CJ enterprise cooperation settlement signing ceremony. / Offered by New World

◇ Tight administration is just not sufficient…we have to search joint ventures and differentiation.

Nonetheless, many individuals consider that as main gamers with capital and stability proceed to strengthen their place available in the market, the competitors for survival amongst midstream and downstream gamers will change into extra intense.

Jeong Yeon-seung, an economics professor at Dankook College, prompt, “(Mid- and low-end platforms) ought to search new paths via mergers and acquisitions, or discover methods to distinguish in skilled fields.” That is due to the net progress fee of the retail distribution market has slowed down, whereas the intrusion of Chinese language platforms continues.

In actual fact, Sseok.com and Gmarket, each owned by Shinsegae Group, are Pan-Samsung corporations. CJ(001040)We determined to work with the group to advertise cooperation in logistics, membership, merchandise, content material and different facets. Ssuk.com’s Ssuk Supply, Daybreak Supply, and G Market Smile Supply will likely be entrusted to CJ Korea Specific, and the operations of the 2 Gimpo Neo Facilities and the Opo Superior Logistics Heart will even be transferred to CJ Korea Specific. The thought is to enhance supply effectivity via third-party logistics (3PL) and make investments the fee financial savings into the primary enterprise.

Q10’s Timon, WeMakePrice and Interpark Commerce are all focusing on the direct procuring market. Q10, which has the benefit of abroad direct buy, is utilizing its personal capabilities to shortly introduce direct buy merchandise imported from abroad. Timon stated that direct buy transaction quantity elevated by 56% in March. As well as, it additionally targets the reverse direct buy market the place home merchandise are bought abroad.

As well as, Lotte Buying additionally plans to focus on the net grocery market together with recent meals with the Ocado Automated Logistics Heart (CFC) to be accomplished in Busan by the tip of subsequent 12 months.

Professor Zheng stated that “the place of main corporations will change into stronger because of the limitations of company capabilities and economies of scale,” including, “Though the variety of customers of China’s direct procuring apps has decreased lately, dangers to Chinese language platforms stay exist”.

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