Created back in 2000, Danawa used to be called a public enemy by offline electronics shopping malls in Korea after it dealt them a staggering blow by revealing the size of their profit margins. However, ordinary consumers loved it. They visited the website in droves, posting their reviews day after day. With time, product suppliers began to contact Danawa regarding direct marketing on the site, leading to an increase in banner ad volume.
“Every time we were tempted to side with the sellers instead of consumers, we stuck to our principle of staying with the consumers in order to create a lasting relationship, and in fact it has brought us many valuable things,” said Danawa CEO Sung Jang-hyun.
The following is an interview with him about the company’s past and future.
Q : Danawa celebrated its 11th anniversary this year. Have there been some twists and turns?
A: We started as a camera price comparison website in 2000. One year and two years later, total visits exceeded 10 million and 30 million, respectively. Then, a roadblock appeared in 2003, when NHN, Korea’s biggest portal, entered the price comparison market with its own shopping service. However, at the end of the day, it has turned out that we somehow put up a good fight. Even after the advent of the giant, Danawa has succeeded in continuing its growth. I believe that the vast volume of product information we have and our customer reviews to refer to have acted as two of our entry barriers.
Danawa is now trying to make another stride forward through an initial public offering. We are having a go at new services in today’s online distribution market swayed by major capitals with the growth slowing down. Down the road, we will stick to our credo of “putting consumers first” to ensure our future endeavors are successful.
Q : The shopping mall market is shifting its focus from online to mobile. How well is your company prepared for this? What is the direction of its evolution?
A: We are preparing for the upcoming mobile-centered environment with prudence. Our price comparison services are available not only on the web but also on a mobile basis via our smartphone applications. The recently launched iPad-version application topped the free download chart for a long time. Our database, containing more than 70 million pieces of product information, is also available for desktops and laptops.
The trend of personalization accompanied by the current mobile revolution definitely deserves some attention. Nowadays, you can tell a certain person’s social preferences, political inclination, daily living sphere and much more simply by looking into his or her social networking accounts. Sooner or later, mobile-based customized shopping services will take off in connection with the trend.
We, in the big picture, can be a pro-vider of information regarding product prices, features, specifications, and rev-iews, etc. Of course, “out-of-the-box” processes and solid profit structures will have to come first to that end. We remember that e-commerce, back in the day when the concept of an open market was still new to many, was just a display stand of offline products.
Q : There are innumerable online shopping websites now. What is your differentiation point and what advantages can you offer over competitors?
A: Danawa is home to all sorts of consumer-oriented contents, such as purchasing guides and reviews. As mentioned earlier, our database contains over 70 million pieces of production info, which I believe is unmatched in the entire industry. We also offer various other services, such as a secondhand goods market and fire sale market, improving convenience for merchandisers and shoppers.
Danawa’s biggest potential still lies in its communities, where consumers provide information and create open discussion forums on their own. Danawa also has a comparative advantage in the PC segment. A lot of PC components and assembled PCs are purchased under the name of Danawa Standard. In the past, Yongsan Electronics Market was the main destination for assembled PC buyers. Danawa has now taken that baton and is further boosting the segment.
Q : Do you have any differentiated business plan for the global market or specific partnerships with foreign companies? If so, could you please provide some details and introduce the strategic approach involved?
A: In 2002, we provided our PC price comparison service to sellers in Zho-ngguancun, Beijing, who had formed a business district akin to Yongsan Market. We had intended to expand there in the long-term and created their web sites free of charge, stressing the importance of online distribution. However, we found that product delivery practices were quite different from those in Korea, and that majority of people were using modems for web access. In other words, we overlooked localization elements at that time.
These days, things have changed, and we are realizing the necessity of new processes that can be applied on a global level. Although we will not resume our overseas business right away, there is no doubt that it will be included in our business roadmap.
Q : What do you feel has changed since going public? What long-term plans do you intend to invest the funds in?
A: We have grown online for the past 11 years, and we are now planning to tap the offline market. Concrete plans include the construction of a joint logistics center and after-sales service centers. In fact, our region-specific warranty service system “Danawa Infra” is already in operation at http://infra.danawa.com/index.html. In addition, we are mulling over the acquisition of community websites and information portals that offer quality content.
Q : Would you give some explanation about your growth strategies for 2012 in the electronics and non-electronics categories, as well as your aspirations for the days ahead? Could you please also summarize 2011?
A: We focused on quantitative growth and IT expansion in 2011, while enlarging our database of non-electronic products such as cosmetics and baby goods in order to become an extensive shopping portal. At the same time, we established a new division to shore up our PC business infrastructure, as well as spun-off the media business unit.
On the marketing and advertising side, we launched an ATL, or “above-the-line,” ad campaign under the catchphrase “Price Comparison Site Knowing about Men and What They Want.” That is to turn ourselves into men’s favorite website and cement our unique market position.
Next year, we will make more efforts regarding choice and concentration, refining our existing services in the PC and electronics segment while strengthening several non-electronics categories such as outdoor goods.