E-commerce Operators Ignore Losses in Cutthroat Competition for Market Share – The Korea Bizwire
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SEOUL, Nov. 29 (Korea Bizwire) — Competition is heating up among South Korean e-commerce operators to get the upper hand in the market. Regardless of losses, they are making aggressive investments while focusing on increasing their market share.
Investment has primarily focused on logistics centers and marketing.
E-commerce giant Coupang Inc., which recently raised funds through paid-in capital increase and mortgage-backed loans, decided to invest more than 1.5 trillion won (US$1.25 billion) for the establishment of logistics centers at 10 sites across the country.
The investment of Shinsegae Group, the operator of the integrated online mall SSG.com, will likely increase further.
After acquiring eBay Korea for 3.5 trillion won, the South Korea’s No. 2 retailer intends to make an additional investment of 1 trillion won over the next four years to expand the number of logistics centers for e-commerce delivery.
Another online shopping platform 11st signed a lease contract for use of a logistics center in Paju, Gyeonggi Province last month and started operating it from this month.
With a floor space of 17,517 square meters, the logistics center is about five times larger than the one that 11st has operated in a neighboring area.
When it comes to online shopping website Lotte ON operated by Lotte Shopping Co., its investment-related expense is increasing primarily due to its aggressive marketing, including issuance of discount coupons.
Originally, the retail industry expected Coupang to collapse within three or four years given that its cumulative deficits amounted to 4.75 trillion won as of the end of last year.
The situation, however, changed after Coupang was listed on the New York Stock Exchange early this year.
On the back of strong financial prowess that it built up through the initial public offering, Coupang is now spearheading the domestic online commerce market.
J. S. Shin ([email protected])