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Impacts on South Korea's E-commerce Market After Shinsegae’s eBay Korea Acquisition

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South Korea’s e-commerce market has shown tremendous growth over the past decade. As it reaches maturity, it will become more challenging for retailers to take market share away from competitors, especially among the top players unless a ground-breaking event such as the COVID-19 pandemic happens in the future. Retail conglomerates such as Shinsegae Group and Lotte Group have shown great interest in the acquisition of eBay’s South Korea operation as the acquisition might be the one and only chance to secure a leading position in South Korea’s retail industry in the foreseeable future.

E-commerce share in Retailing

Retail Value RSP excl Sales Tax in USD million, Fixed 2020 ex rates, Current Prices

Source: Euromonitor International

The acquisition of eBay Korea by Shinsegae Group draws the attention of many parties since no player has conquered both online and offline retail channels in South Korea. For the two companies to seek success in the longer term, they should ensure that the retail brands carry the current positionings instead of forcing them to merge as a single brand. For instance, considering that Gmarket and Auction's users differ from those of SSG.Com, executing a separate strategy based on consumer segmentation would be crucial.

Shinsegae Group’s acquisition of eBay Korea is likely to become the cornerstone of a strong omnichannel network connecting Shinsegae and eBay Korea. Joining forces of the top players – Shinsegae’s nationwide coverage of brick-and-mortar outlets, eBay Korea’s wide range of customers including middle-aged users – the acquisition sets the birth of a powerful retail giant that can be hardly beaten. Consumers may be allowed to return items purchased from third-party merchants on Gmarket at Shinsegae’s thousands of offline outlets, which may help secure a loyal customer base, as the ‘return to a local store’ policy became a key differentiator for Walmart in the US. Also, Shinsegae will be able to build a strong marketplace platform leveraging eBay Korea’s expertise in the marketplace space, considering that eBay Korea was the first company to successfully introduce the business model in the South Korean market.

The acquisition may present unforeseen obstacles over the next months or even years. However, it may be the right timing for Shinsegae Group to sharpen its capability to the next level, based on its recent success with the launch of SSG.Com.

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