11st Commands 6% of Korean E-commerce Market
The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.
11st forges strategic alliance with Amazon
— SK telecom’s subsidiary 11st forged a strategic alliance with Amazon (Korea Economic Daily, Nov. 14).
— Amazon will acquire 0KRW50-300bn in 11st convertible preferred shares based on how well the alliance and other collaborations progress (Seoul Economic Daily, Nov. 13).
— Media reports speculate that domestic consumers will be able to purchase products on Amazon via 11st. To be specific, 11st will access Amazon sales data to stockpile products in high demand and sell them via its website. For domestic consumers shopping on Amazon and other overseas e-commerce sites, this will remove the burden of import duties, circumvent the language barrier and cut delivery time/fees.
Hope to increase 11st value
— 11st commands 6% of the Korean e-commerce market, ranking fourth after Naver Shopping, Coupang and eBay Korea. The company’s profit margin-oriented strategies have raised concerns over a potential decrease in market share.
— In 2018, Nile Holdings, a special purpose vehicle founded by H&Q Korea, the National Pension Service and others, valued 11st at KRW2.5tn and invested KRW500.0bn (18.18% stake).
Synergies with non-communication businesses
— SK telecom has been planning a subscription-based service connecting e-commerce (11st), broadcasting (Wavve) and security (ADT Caps). The alliance with Amazon may yield a subscription-based business model similar to Amazon Prime.
— Amazon Prime Video, which is the fourth largest OTT service in the U.S., may be able to generate synergies with SK telecom’s Wavve.