Potential SME data home shopping policy raises concerns

[Photo by MK DB]

The government’s push to introduce data home shopping, or T-commerce, with a focus on small and medium-sized enterprises (SMEs) and small business owners is causing concerns within the industry. The addition of a new channel to the home shopping market, which is already struggling thanks to a decline in TV viewership, could lead to excessive competition.

According to retail industry sources on Sunday, a special committee under the Presidential Committee of National Cohesion, responsible for policies related to small business owners, is preparing policy proposals for the establishment of a data home shopping channel centered around SMEs.

Data home shopping involves e-commerce based on data, conducted via recorded broadcasts rather than live TV broadcasts. The committee plans to finalize a report containing various measures to enhance small business owners’ self-reliance in March 2024. Discussions are ongoing regarding whether to include the establishment of a data home shopping channel in the final report, and the Ministry of Science and ICT will review it and decide whether to proceed once the committee proposes the policy.

But concerns are arising within the home shopping industry regarding the potential for the introduction of a data home shopping channel to exacerbate market overheating. Lotte Home Shopping saw an 89 percent drop in operating profit in 2023 compared to the previous year, while Hyundai Home Shopping saw a 45 percent decline. With 17 home shopping channels currently available in Korea, or 10 TV home shopping channels and seven data home shopping channels, the industry is wary of market saturation.

The fact that most home shopping channels already maintain a composition ratio of over 50 percent for SME products raises doubts about the effectiveness of the proposed policy. Lotte Home Shopping fills over 70 percent of its entire product lineup with SME products, while GS Shop allocates over 55 percent for TV home shopping and over 70 percent for data home shopping to SME products.

“The proposed data home shopping is specifically designed to focus more on small business owners and the actual proportion of small business products in the existing home shopping lineup is minimal,” an official familiar with the matter said.