Korea's online sellers hop between platforms in search of coupons and promotions

Korean e-commerce sellers are engaging in multihoming, the act of switching between different competing platforms to take advantage of their promotions and tap into various audiences.

Naver's e-commerce platform [SCREEN CAPTURE]

Don't put all your eggs in one basket — or, if you're a business owner in Korea, don't sell all your eggs on just one online marketplace.

More sellers are engaging in “multihoming,” which is the act of switching between different competing platforms through which they sell their products. They are able not only to sell more goods by tailoring their products to each platform's consumer base, but also to take advantage of the promotional benefits the platforms offer as they battle for shares of Korea's e-commerce market. CEO Jeong Jong-cheong, who has run the online grocery store Koreanssan for 10 years, sells the business's products on over 10 e-commerce platforms including Naver, Coupang and AliExpress.

AliExpress, where Jung most recently set up shop, gave him a large number of coupons that knocked down or exempted him from platform fees. Recently, through Naver’s “daily special offer” promotion, Koreanssan recorded its highest sales in a day for roasted eggs.

“With the number of e-commerce platforms increasing, it has become important to utilize each of the platforms’ services and functions according to their competitive advantages,” Jeong said.

Chinese e-commerce platform AliExpress launched K-venue, a separate channel for Korean products that exempts sellers from the usual fees charged for entry and sales. [SCREEN CAPTURE]

What’s the deal?

Domestic and international online platforms are currently locked in fierce competition for share of Korea's e-commerce market. For platforms, it has become as important to secure quality sellers as it is to gain customers.

Chinese players, such as AliExpress and Temu, took an early lead with the sheer volume and variety of products they sold. AliExpress created K-venue, a separate channel for Korean products, in October and exempted sellers from the usual fees charged for entry and sales. This allowed a diverse range of brands, spanning from big brands to mid-sized and small businesses, to begin selling their products on the platform.

Naver, meanwhile, launched a service in late May that reimburses sellers for the shipping costs used on returned goods, following its launch of the same-day delivery shipping for customers in April.

Naver's same-day shipping service launched in April. [SCREEN CAPTURE]

Gmarket also drastically expanded its support for sellers. For instance, it provides businesses with support for advertising and storage during “Big Smile Day,” the online platform’s largest discount event of the year. Retail giants Shinsegae, the owner of Gmarket and SSG.com, and CJ Group, which owns CJ Logistics, partnered up last year in the areas of retail, logistics and product development, such as launching exclusive food products on their platforms. 11Street currently runs a program exclusively for domestic businesses that exempts them from paying platform fees until they reach 10 million won ($7,250) in revenue.

Online vendors who primarily use e-commerce marketplaces to sell their products are profiting from the competition — while the platforms squabble for market share, almost to the point of bleeding out.

“Having a lot of excellent sellers gives the biggest competitive edge to commerce platforms that serve consumers,” a domestic e-commerce industry insider said. “Because there are so many platforms now — added with the aggressive marketing from Chinese commerce players — companies are now competing over who can provide better support for sellers in terms of discounts, advertising, product returns and sales commission fees.”

“I have tangibly noticed a considerable difference in support given by platforms from before and after Chinese commerce entered the Korean market,” a seller from an online mid to small-to-medium-sized business said.

Domestic e-commerce platform 11Street's "Original Seller" program exempts sellers from paying platform fees [SCREEN CAPTURE]

Vendors mix it up

Online businesses now freely try out different platforms to make their products stand out. They switch up the composition of their products, the added benefits and delivery options by platform in line with the marketplace’s consumer base and consumption patterns.

For instance, Park Sung-yong, the CEO of hangwa (traditional Korean confectionery) business Baodam, sells different varieties of goods sold on Coupang, Naver and Hanwha Galleria. On Coupang, Baodam primarily sells the delicacies in bulk with lower prices per unit; while on Naver, the shop sells individually packaged goods that encourages multiple purchases. Luxury gift sets are sold at the higher-end Hanwha Galleria.

“Each platform has different customer bases, so we are trying hard to compose our goods accordingly to suit their tastes,” Park said.

In fact, Baodam initially sold hangwa gift sets on Naver’s livestream shopping platform but was prodded by customers to “sell individual goods” as the “gift sets were unwanted.” Park started producing individually packaged items, such as doraji jeonggwa (candied bellflower root), in bulk on Naver exclusively.

“We are trying to increase our brand exposure by casting as much fishing nets as possible,” Park said.

What now?

With the increased options in platforms to choose from, the sellers’ bargaining power in making deals with e-commerce businesses is expected to grow stronger. The top four apps with the most domestic users last month were Coupang, AliExpress, 11Street and Temu, in that order, according to industry tracker WiseappㆍRetailㆍGoods. The rapid growth of Chinese e-commerce players has stalled slightly after safety issues were uncovered regarding various products sold on their platforms, with monthly active users decreasing for two consecutive months.

“Sellers will not be tied down to one particular platform for a while, and platforms will continue to come up with new promotional attempts to persuade them to enter,” an insider in the domestic e-commerce industry said. “However, it is unclear how long this bleed-out hyper-competition will be able to continue.”

BY HONG SANG-JI [kim.juyeon2@joongang.co.kr]