Competing with Amazon, Google on Home Turf
South Korea’s e-commerce companies are striving to reinforce their competitiveness to defend the home turf against global giants.
Domestic companies which have joined the e-commerce market, such as Naver, Shinsegae Group, Coupang and 11st Street, are strengthening their power in the domestic market by investing in distribution and logistics infrastructure, creating the ecosystem of mutual growth and developing new customer services, according to industry sources on April 28.
Naver is seeking to revitalize the e-commerce ecosystem with a strategy that aims to grow together with sellers. As part of its plans, the company has implemented a “Start Zero Commission Program.” Under the program, Naver does not receive commissions from new startups which are less than one year old for e-commerce transactions worth less than 5 million won (US$4,310) a month for a year. In addition, the firm has carried out an “Escrow Program” to immediately return 80 percent of payments to vendors that sell products through Naver’s e-commerce platform.
Coupang is making an effort to improve its quick delivery capability by building logistics infrastructure. In particular, the company offers a 90-day free trial of its subscription service with free return shipping called Rocket Wow club so that customers can experience Coupang’s e-commerce competitiveness. It also provides a next morning fresh food delivery service “Rocket Fresh” and a same-day delivery which delivers products in the evening for free when customer orders them in the morning.
Such moves by the domestic companies came after U.S. e-commerce giant Amazon has recently started the Korean language service and other global firms have targeted the South Korean market. Instagram introduced “shopping tag” function in South Korea in May last year. Google has also started Google Shopping Service in the domestic market from October last year.