Groupon aims for slice of Korean social commerce market

Groupon Korea on Monday punctuated its launch on the Korean market with a monthly sales target of 10 billion won ($880 million) during the first half of this year.

The goal falls behind the annual 200 billion won targeted by Ticket Monster, the nation’s top social commerce operator, but Groupon brushed aside concerns, saying its initial goal would be to create a healthy social commerce environment here.

“Our goal is to go back to basics and start everything from there, everything from our system and business know-how to customer services,” said Hwang Hee-seung, CEO of Groupon Korea.

A 50,000 won voucher for online shopping mall Wizwid, sold at half price was Groupon Korea’s first sales item.

Services will initially be available in six regions in the country including Seoul, expanding to 10 next month.

Groupon, based in the U.S., is currently doing business in some 44 countries around the world. The firm first launched in Chicago in 2008.

The launch comes as the social commerce market teeters on the brink of explosive growth, with the market expected to expand 10-fold to generate up to 500 billion won in sales this year, according to Korea’s association of internet firms.

Groupon will consequently have stiff competition, industry watchers said, especially since its operation methods vary little from rivals such as Ticket Monster, which mainly derives revenue by selling products or services at a 50 percent discount to split the proceeds with the firm selling those products or services.

“We won’t say our services will vary very much from our competitors, but we do want to say our core value will be trust-building,” said Hwang.

Groupon Korea, in order to keep customer satisfaction levels high, will commit up to 30-40 percent of its 250-strong workforce to customer services.

This is because the company comes into the market amid mounting complaints from consumers claiming they were shortchanged by social commerce firms, which largely depend on online social media outlets, such as Facebook and Twitter, to get an idea of what would sell online and connect their demands to consumers.

The services and products, because they are cheaper than the market price, are sometimes substituted with lower-quality goods.

“We will be conducting hands-on quality checks for up to 80 percent of the goods and services provided by our partner firms in order to make sure they are up to par,” Hwang said.

Another perk for customers in Korea ― already known as some of the pickiest in the world ― will be its refund policy.

All goods and services, unless the customers were found to be in fault, would be available for refunds within seven days of purchase, Groupon Korea said.

Regarding the competition that Groupon would pose, Ticket Monster said it has no qualms.

“We are quite confident that we have succeeded in localization and will continue to take the lead in the Korean market,’ said Hong Sung-gook, a spokesman for Ticket Monster.

By Kim Ji-hyun (jemmie@heraldcorp.com)