November 24, 2024

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[THE INVESTOR] eBay Korea, the local unit of the US online shopping giant, has become the nation’s third-largest retailer in terms of transactions, becoming a direct threat to the top two Lotte and Shinsegae.

According to industry sources on June 22, eBay Korea’s annual transactions exceeded more than 14 trillion won (US$12.2 billion) last year, which compared to Lotte’s 26 trillion won and Shinsegae’s 18 trillion won.

eBay entered the Korean market in 2001, becoming the largest shareholder of Auction, the nation’s first online open market. The company also acquired the largest open market operator Gmarket in 2009. Auction and Gmarket were merged to become eBay Korea in 2011. Their combined market share -- Gmarket’s 38.5 percent and Auction’s 26.1 percent -- sparked some monopoly concerns among rivals at the time but the antitrust watchdog approved the merger saying the online shopping market would become boundless in the near future combining all online and offline retail sectors.

“eBay struggled in raising profits in the early days. The merger between Auction and Gmarket was decisive for it to secure a firm footing in Korea,” said an industry source on condition of anonymity.

Even after the merger, it faced many challenges. Online shopping malls, including those owned by big retail conglomerates, were mushrooming, while daily deal sites backed by huge funding from big investors were luring young, trendy shoppers.

“While other online shopping sites spent big on marketing activities and differentiating themselves from others, eBay continued to focus on its core retail business, investing in mobile shopping and payment systems,” the source said.

For instance, the nation’s top three daily deal sites Coupang, WeMakePrice and Ticket Monster posted a combined 787.3 billion won (US$690.15 million) of operating loss last year. After financial losses for the past seven years, the firms are ditching the coupon business, eyeing the e-commerce market overall.

eBay also poured resources to increase overseas sales through Gmarket’s global shopping site called Global Shop that was launched in 2006. Now the site offers services in English, Chinese and Japanese.

Taking advantage of the K-pop sensation in Asia, the site has seen a stunning growth in recent years. Last year, its transactions reached almost 600 billion won, making up about 30 percent of the market.

Sources say eBay Korea is playing a key role for the parent firm’s global push. Last year, Korea with 863.3 billion won sales was the third-largest market for eBay globally after the US and UK.

Largely buoyed by upbeat performance in recent years, eBay Korea paid 126.1 billion won as dividends to the US headquarters last year for the first time.

By Lee Ji-yoon (jylee@heraldcorp.com)