Market Changer
The unusual move of Huh Min, founder of Korean social commerce site Wemakeprice and its holding company Wonder Holdings, is heralding turmoil in the Korean online shopping mall market.
According to industry sources on May 28, Wemakeprice will switch its employee evaluation system from a performance-based one to a customer satisfaction system starting in June. As a result, performance reviews of 1,300 employees will be abolished, and customer repurchase rates will be the key indicator of employee evaluations, instead.
First, the social commerce site chose customer repurchase rates as an evaluation standard for MD, rather than sales. It plans to place emphasis on repurchase rates, return rates, and the number of consultations, going beyond its previous strategy in which incentives were offered based on sales.
The company’s “Customer First” principle has been implemented since last Dec., when it became the most-visited social commerce site in the nation. The prime example is a complete overhaul of services that send overseas products ordered by people living in the country directly to their place, which started early this year. With sales of fake goods increasing in line with the popularity of direct purchases in overseas websites, the number one social commerce site terminated its contract with 70 partner companies out of 90. The firm recently began to provide the industry’s first services for free returns and exchanges of certain fashion products. It is an unconventional decision that leading online shopping malls such as Gmarket and 11street have never implemented.
Social commerce sites, which came to sudden prominence in the local e-commerce and online retail market in 2010, have been logging strong growth in tandem with the spread of mobile devices. The market is dominated by Wemakeprice, Coupang, and TMON, but nobody knows what may happen in future market dynamics. The three major companies were embroiled in legal battles early this year, owing to the sales of illegal products or their tendency to slander their competitors.
Experts are saying that the fast-growing social commerce industry will be reorganized in a way that only the top-ranked company will survive in the end. It means that the odds are heavily against the current competitive landscape, under the circumstances that global companies like Amazon and Alibaba will soon enter the market. Therefore, observers say that as competition in the market drags on, Wemakeprice will be in an advantageous position in the market, unlike foreign companies such as Coupang and TMON. Of course Mr. Huh, holding a 100 percent stake in the company with hundreds of billions of won, will likewise be in the same advantageous position.
An industry source explained, “The local social commerce market grew to reach 4 trillion won last year, but the open market worth about 16 trillion won was in a stalled growth mode.” That is equivalent to US$3.9 billion for the local social commerce market and US$15.7 billion for the open market. The source added, “Open markets’ position could be weakened, depending on what kinds of strategies Wemakeprice will make.”