Online open markets repositioning as shopping hubs

Online open markets in Korea are positioning themselves as shopping hubs. Through extensive partnerships with conventional offline retailers such as department stores and grocery retailers, major open markets including eBay Korea‘s Gmarket and Auction platforms as well as SK Planet’s 11st are giving consumers access to low-priced, unique products offered by individual sellers as well as branded products that would normally be available only offline.

“Partnering with major distributors and brands helps to diversify our products and create a premium image, increasing customer trust and satisfaction in an increasingly competitive online shopping market,” said Lee Ju-cheol, head of business alliance at eBay Korea.

eBay Korea first began partnering with Lotte Department Store in 2012, rapidly increasing its partnerships to 43 partners in 2016, including all major department stores, as well as large supermarkets and home shopping networks. The company estimates that about one-tenth of its total sales in 2016 came from its partners, about a fivefold increase in percentage points over the past five years.

SK Planet‘s 11st is also currently partnered with major department stores, home shopping networks, supermarkets and outlets. According to the company, sales of department store products on 11st grew 118 percent on-year in 2016. 11st users responded strongly to partnerships with home shopping networks as well, more than tripling those sales on-year in 2016. 

“Department stores are seeing their customer base grow as they sell their trusted products through online shopping channels like 11st,” said Sim Jae-hyung, a manager with the affiliation planning team at 11st.

The products sold through these partnerships are identical to those sold in offline shops and on the department stores’ own web shops, but customers have flocked to the open markets for an easier access to comparing prices and products. Consumers are also offered with diverse deals and discounts that are available exclusively on open-market platforms.

These partnerships have become an important edge for open markets as competition for customers intensifies in the online space, the industry officials said.

Offline retailers are quickly strengthening their own online and mobile stores, while social commerce operators like Coupang, Tmon and WeMakePrice are luring in consumers using time-sensitive deals.

Social commerce companies, in particular, have been offering exclusive delivery systems like Coupang‘s Rocket Delivery and WeMakePrice’s Wonder Delivery, while barrages of discount coupons are offered by Tmon and others. Open market operators say their strength is in the diversity and wide scope of products and sellers.

“While open markets work mainly as platforms that directly connect sellers to consumers, social commerce sites often buy the products that they then sell to their users,” said a spokesman for eBay Korea. 

“Department stores can sync their web shops to the open market platforms, and consumers can use open markets‘ discount coupons on department store products. Open markets are increasingly becoming search engines for all kinds of products.”

“Since it is difficult for retailers to maintain traffic simply on their own websites, it has become necessary to partner with open markets,” wrote analyst Cindy Yu for Daishin Securities, forecasting that the influence of open-market platforms will continue to grow in the future. 

By Won Ho-jung (hjwon@heraldcorp.com)