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Korean Social Commerce Market Growing Rapidly
Communist Capitalism
Korean Social Commerce Market Growing Rapidly
  • By Cho Jin-young
  • April 17, 2015, 07:00
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Coupang, Ticket Monster, and WeMakePrice recently released their audit reports, which showed that the domestic social commerce market is rather stabilizing, although the three were in the red without exception as expected. The sales of each increased a lot last year. Specifically, the annual total sales reached 348.5 billion won (US$320.9 million), or 138 percent up from a year earlier, for Coupang; 184.3 billion won (US$169.7 million), or 134 percent up, for WeMakePrice; and 157.4 billion won (US$144.9 million), or 37.2 percent up, for Ticket Monster. 

During the same period, WeMakePrice and Ticket Monster significantly reduced their operating losses to 29 billion won (US$26.7 million) and 24.6 billion won (US$22.6 million) from 36 billion won (US$33.1 million) and 70.7 billion won (US$65.1 million), respectively. The two companies’ business profit rates improved from -61 percent to -15.7 percent and from -45 percent to -15.6 percent between 2013 and 2014, too. Meanwhile, Coupang’s losses skyrocketed from 4.2 billion won (US$3.9 million) to 121.5 billion won (US$111.8 million) due to its recent large-scale investment in delivery and logistics systems. 

Although still failing to make profits, the three firms have contributed greatly to the expansion of the domestic social commerce market. According to the Korea Chamber of Commerce and Industry, the market had stood at around 50 billion won (US$46.0 million) in 2010, its first year, but the size reached 1 trillion won (US$920 million) in 2011, 1.07 trillion won (US$985 million) in 2012, 3.14 trillion won (US$2.89 billion) in 2013, and 4.81 trillion won (US$4.43 billion) in 2014. This year, it is estimated to grow to approximately 6.9 trillion won (US$6.4 billion). 

At the center of the rapid growth is mobile business, which accounts for 70 percent of the overall transactions. The number of their app users has exceeded that of those using open market applications as well. 

In addition, the three companies recently attracted investment abroad. For instance, Coupang attracted US$400 million from Sequoia Capital, BlackRock and so on last year. The fund has been spent on its delivery services, including those for delivering daily necessities within two hours. 

A consortium led by Kohlberg Kravis Roberts & Co. is about to make an investment in Ticket Monster. The American PEF is planning to acquire 59 percent of Ticket Monster shares from Groupon, and the negotiations are to be completed before the end of this month. The consortium is estimating the corporate value of Ticket Monster at 874 billion won (US$805 million), tripled in just one year.