Coupang launches own brand in tow with rivals
With its brand Tamsaa, Coupang hopes to provide products that “customers didn’t even realize they needed,” the company said, by analyzing thousands of product reviews and consumers’ purchasing patterns.
Coupang will start with five items: toilet paper, tissues, bottled mineral water, bottled sparkling water and paper cups. The company plans to later expand the portfolio to pet supplies and home cleaning products.
“All Tamsaa products begin with a question: What do customers really want?” said Navid Veiseh, senior vice president of Coupang’s global e-commerce team. “Tamsaa was developed with our focus fixed on the customer in every aspect, including product quality and price.”
Launching a private brand has become an indispensable business move for retailers. “It is a necessary step to raise their competitiveness in the industry,” said Jung Yeon-sung, a business professor at Dankook University in Yongin, Gyeonggi.
Earlier this year, TMON, a leading e-commerce operator in Korea and a rival of Coupang, launched its own private brand called 236:) that focuses on household supplies like towels, bottled water and clothes hangers. TMON had been developing in-house products since 2012 but didn’t launch the brand until this year. The business started with eight items and now has a lineup of 13 products.
“Offering private-brand products is like giving another reason for customers to pick TMON among multiple other options out there,” said Edgar Choi, a manager on TMON’s communication team. “When we are just serving as a platform, there are restraints in controlling the price and margins, but if we engage in the product portfolio, its manufacturing and distribution, it becomes much easier for us to offer lower prices and lure customers with them.”
TMON’s private brand largely includes household and pet supplies. Sales of its cat litter, Mozzi’s Cat Litter, accounted for 70 percent of all cat litter products sold on TMON since the brand’s launch in May 2015.
Private brands can be a boon for e-commerce operators, who have been at each other’s throats in the past few years in a fierce race to the bottom over who can offer the lowest prices. But private-label products can also end up being a meaningless investment if the brand identity is not firmly established, Professor Jung said.
“In order for private-label products to win the hearts of online shoppers, they will need to prove their low price and high quality,” he said.
But eventually, Jung warned, companies will hit a limit because every online shopping platform is offering similar private-label products like bottled water and tissues, which according to the professor will lead to meaningless competition.
In order for these ambitious brands to survive in the long run, establishing a unique and attractive product portfolio and building the right brand image is crucial, he said.
“These in-house brands have to build consumer credibility and uniqueness to the point where even if the retail brands themselves vanish, people will still buy their in-house products at other places,” Jung said. “To achieve this, investing in marketing and merchandising will be crucial.”
BY JIN EUN-SOO [firstname.lastname@example.org]
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