E-mart offline stores projected to create synergy with eBay’s open market platforms

By Kim Bo-eun

Shinsegae Group’s ambitious acquisition of the local unit of eBay is set to produce a retail giant that will rival the existing top players. With its latest acquisition, Shinsegae is set to jump into the competition between Naver and Coupang which has dominated the local e-commerce market.

Shinsegae’s offline discount chain E-mart signed an agreement to purchase 80 percent of eBay Korea’s shares for 3.44 trillion won ($3.04 billion). Despite the higher-than-expected acquisition cost, Shinsegae is making a bold bet that the combination of its online and offline sales channels merging with eBay Korea’s open market platforms will translate into bolstered competitiveness. Neither Naver nor Coupang have an offline sales channel.

The latest deal is also set to result in the consolidation of top players and widen the gap with smaller players in the market.

With the acquisition, Shinsegae is expected to become the No. 2 player in the domestic e-commerce market after Naver. SSG.com, Shinsegae’s online commerce channel, currently accounts for 3 percent of total e-commerce transactions, while eBay Korea accounts for about 12 percent. The top players are Naver with an 18 percent share and Coupang with 13 percent.

Shinsegae’s acquisition of eBay Korea will boost its market position to second place with a share around 17 percent. Annual transactions are expected to jump to a combined 24 trillion won; eBay Korea’s annual transactions total 20 trillion won and SSG.com 4 trillion. That will seriously challenge Naver’s annual transactions which total 28 trillion won, according to market experts.

Naver is the dominant portal site through which most online shoppers search for items and serves as the platform that connects consumers with vendors on various open markets.

Naver and Coupang have different models. Naver’s portal site acts as a broker between vendors and consumers, while Coupang buys and ships most of its products directly.

Coupang is the strongest player when it comes to same-day and early-morning delivery services, which has become a key driver of its success. Under same-day delivery, items purchased in the morning are delivered by the evening of the same day.

E-mart also has strengths in is its online early-morning delivery service of groceries. But with the latest acqu