[NEWS IN FOCUS] Naver, Coupang take leaves from each others' books

Naver and Coupang, Korea’s two largest digital platforms by number of transactions, are borrowing from each other's success stories — by getting into the rapid delivery game for Naver, and by beefing up digital content for Coupang.

Naver's total transactions, with includes purchases of digital content like music and webtoons as well as goods, came to 20.9 trillion won ($18.5 billion) last year, according to mobile app analytics company WiseApp, accounting for 15.5 percent of Korea’s e-commerce turnover.

Coupang's transactions totaled 17.8 trillion won, followed closely by eBay Korea's 17 trillion won (which includes sales on popular commerce site Gmarket).

Naver is lining up fulfillment centers to promise faster delivery to customers — a direct challenge to e-commerce specialist Coupang, known for its next-day Rocket Delivery system.

The SoftBank-backed Coupang, on the other hand, is considering livestreaming prominent sports leagues such as the English Premier League (EPL) and National Basketball Association (NBA), according to industry sources.

“It is true that Coupang contacted us to discuss fees required to livestream international leagues such as EPL and NBA,” said a source at a local media agency with exclusive rights to multiple major professional sports leagues.

“The discussion is still ongoing, and nothing has been decided,” the source added.

Coupang declined to comment on the issue.

In July, Coupang acquired the software owned by Hooq, a failed Southeast Asian video-streaming service owned by Singapore Telecommunication.

“Coupang won’t need to make heavy investment in video streaming thanks to Hooq's software,” said Lee Ji-young, an analyst at NH Investment & Securities. Coupang's sales got a significant lift this year from the pandemic, Lee said, and the masses of people who switched to shopping online.

She expects the e-commerce operator to add video streaming to its paid membership as Amazon did for its Prime subscribers.

Coupang already has telegraphed its interest in video and music services by adding them to its corporate articles as business objectives and registering the trademarks Coupang Streaming, Coupang Play and Coupang TV last month.

Yoo Seung-woo, an analyst at SK Securities, said that video streaming is only one step in Coupang’s greater ambition to become a comprehensive digital platform like Amazon and Naver.

“It is on track to turn into a digital platform in a broader sense,” Yoo said. “Coupang could rely on its paid subscribers for the streaming service.

“In the long run, it will aim to produce original content or its own digital devices,” he said.

One of Coupang's undeniable vulnerabilities is its financial health, after a 723.2-billion-won net loss last year due primarily to the cost of building up distribution centers across Korea.

Naver is far healthier financially and has a promising partnership with CJ Group. It announced a high-profile deal with CJ last month in which the two companies agreed to trade stock worth 600 billion won to create synergy in the e-commerce, fulfillment and entertainment businesses.

Naver will likely use CJ Logistics, Korea’s largest logistics company, to carry out delivery of goods sold by Naver Shopping or purchased through Naver Pay.

The two companies will build “a new logistics system that could digitize all processes of online shipping from orders to notices of delivery, automate demand predictions and the delivery process and optimize locations for storing items,” according to a joint statement.

Coupang and CJ Logistics are already working together. Customers who buy products on the shopping platform’s Brand Store segment can get their orders within 24 hours through CJ Logistics.

During a conference call earlier this month, CEO Han Seong-sook said that system could be applied to more products in the future.

Oh Dong-hwan, an analyst at Samsung Securities, said that Naver will reorient its focus because revenues from advertising, its major income source, are sluggish.

“Naver is shifting its business focus from portal ads [which grew just 3.6 percent year-on-year between the first quarter through the third quarter this year] to commerce, fintech and content,” Oh said.

“The company has been strengthening its competitiveness in delivery services via tie-ups with logistics companies such as CJ Logistics.”

E-commerce has had a good year as people stay at home due to the pandemic.

In the first half alone, transactions on Naver were estimated to be 12.5 trillion won, according to WiseApp, up 37.4 percent from a year ago. Transactions on Coupang were 9.9 trillion won, up 26.3 percent on year.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]