Preempting the 8 Trillion Market … Use of Own Platforms by Fashion Companies on the Rise

Coupang Dives into the Spotlight of Shopping Live Commerce | 1 — Women's clothing brand NAIN live commerce

The live commerce market is being reevaluated.

The domestic live commerce market has entered an era of competition, starting from portal companies like Naver and Kakao, and recently joined by Coupang. This growth is anticipated not only in ecommerce platforms like Coupang but also as telecommunications companies like KT are joining the live commerce space.

Currently, Naver and Kakao are leading the live commerce sector. Both platform companies are embracing live commerce as a new growth engine in line with the trend of increased untact (non-face-to-face) consumption due to COVID-19.

Naver launched 'Naver Shopping Live' and Kakao launched 'Kakao Shopping Live', each stepping into broadcasts in collaboration with department stores and fashion companies.

Coupang Dives into the Spotlight of Shopping Live Commerce | 2 — Naver Shopping Live broadcast capture

Naver officially launched the Naver Shopping Live platform in July after a trial service in March last year. Shopping Live is used for various purposes, including introducing products, launching new products, collaborating with various events, and introducing limited items. As a result, Naver's Shopping Live reached a cumulative viewership of 45 million within four months of its official opening, and as of last November, the transaction volume increased by 340% compared to the early service launch in August.

Kakao Shopping Live also began its beta service last May and was officially launched in October. As of last November, the cumulative number of views exceeded 10 million, with an average viewership of 110,000 per broadcast. The transaction volume in October increased 21 times compared to the beta service opening and showed a 2.5-fold increase compared to September, indicating continuous growth.

Coupang Dives into the Spotlight of Shopping Live Commerce | 3 — KakaoTalk Shopping Live broadcast capture

There are various reasons why Naver and Kakao are leading the live commerce market, such as low commission fees of 3-10% and increased sales based on strong traffic.

While department stores and fashion companies are utilizing their own live commerce platforms, it is challenging to match the traffic of portals. Strong traffic has the same effect as gathering a crowd offline.

An industry insider mentioned, “Fashion companies are increasingly diving into live commerce using the live platform tools of Naver and Kakao. The burden on sellers is less since the sales commission is relatively low compared to traditional distribution channels.”

Coupang Jumps into the Spotlight of Shopping Live Commerce

Coupang Jumps into the Spotlight of Shopping Live Commerce | 4 — Coupang Live Website

Coupang Takes On the Challenge with ‘Coupang Live’

The e-commerce company Coupang has thrown its hat into the ring of live commerce.

Last December, Coupang launched the 'Coupang Live Creator' app on the Android Play Store and opened the 'Coupang Live Creator' website, commencing recruitment for live commerce creators and suppliers (Vendor).

The official launch date for 'Coupang Live' is still unknown, but the opening of the app and website indicates that the launch of Coupang's live commerce service is imminent.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 5 — Coupang Live Website

According to the Coupang website notice, 'Coupang Live' is introduced as a live commerce platform that allows customers to learn about and purchase products through real-time streaming. Participants in live commerce are divided into creators and vendors, and 'Coupang Live' aims to provide a more valuable shopping experience to customers while growing together.

Here, vendors refer to Coupang sellers. Coupang sellers can directly sell their products through live commerce, similar to how Naver allows SmartStore sellers to use shopping live.

Coupang also refers to another participant in live commerce as 'creator'. Coupang Live Creators are those who can plan live content but do not have their own products to sell. Currently, Coupang operates the Coupang Partners service, allowing individual bloggers, SNS, and website operators to sell Coupang products through crowdsourcing. They receive a certain commission on sales. Coupang Live Creators are expected to host live sessions for Coupang products and receive a certain percentage of the sales amount.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 6

An industry insider mentioned, “Following the launch of the video streaming service 'Coupang Play' last year, Coupang is expected to enter the live commerce market through 'Coupang Live'. Recently, the telecommunications company KT also launched the live commerce platform 'ShoppingLive'”.

KT's 'Shopping Live' is the first live commerce platform opened on Seezn (season), an OTT (Over-The-Top, a service providing various videos such as movies and dramas over the internet) service by a telecommunications company. 'Shopping Live' on Seezn offers vertical live commerce broadcasts optimized for mobile, allowing users and sellers (MD) to communicate in real-time, making purchases and payments. 'Shopping Live' can be accessed through the Seezn home screen banner, and users can move directly to the purchase site by clicking the 'Buy Now' button while watching, if they wish to purchase a product. KT is currently providing the Shopping Live service in partnership with Hyundai Home Shopping and GS Home Shopping.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 7 — KT Season Shopping Live

Domestic Live Commerce Market …Expected to Grow to 8 Trillion Won by 2023

The rush of companies from portals to e-commerce into live commerce is due to the high growth potential of the domestic live commerce market.

According to eBEST Investment & Securities, the domestic live commerce market is expected to grow to a size of 8 trillion won by 2023. Last year, the size of the Korean live commerce market was estimated to be around 3 trillion won. This is a figure calculated by applying a 3.5% live commerce market share to the expected market size of 240 trillion won for e-commerce in 2023.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 8 — Estimation of the Domestic Live Commerce Market Size (Data by eBEST Investment & Securities)

The estimation is conservative based on the growth rate of the already developed Chinese market. Considering that the size of the Chinese e-commerce market was 9.9 trillion yuan (B2C and C2C combined) in 2019, and the size of the live commerce market was 433.8 billion yuan, the live commerce market share of the total e-commerce was about 4.4% last year. Note that the size of China's live commerce market was forecasted to be 961 billion yuan (approximately 170 trillion won) in 2020, with an expected market share of 8.8%.

As internet platforms are diving into the live commerce market and as traditional retail companies, including home shopping networks, are accelerating their entry, the market potential is high.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 9 — Conversion Rate of Live Commerce Purchases (Data by eBEST Investment & Securities)

This growth rate is a result of high efficiency through asset lightening, high purchase conversion rates, and high scalability. Live commerce can be seen as a lightened asset model of home shopping based on streaming, where live commerce operators charge sales commissions to participating merchants, which are significantly lower compared to traditional fees.

While typical e-commerce conversion rates are known to be around 0.3-1.0%, live commerce conversion rates are estimated to be between 5-8%.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 10 — Babada.com Live Commerce

Fashion Companies Start Live Commerce Services Using Their Own Platforms

As the growth of live commerce is anticipated, fashion companies are also actively jumping into this market.

The approach of fashion companies to live commerce falls into two major categories. They either broadcast directly through their own platforms or use channels of portal companies like Naver, Kakao, or specialized live commerce platforms like Grip, Shoppertainment Live, and Ot-bang.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 11 — Shinsegae International's Launched S.I. Live

Their own platform incorporates live commerce features into the currently operating proprietary mall. A representative example is the live commerce platform 'S.I. Live (S.I. LIVE)' recently launched by Shinsegae International.

Shinsegae International has recently dived into the live commerce business in earnest by building its own broadcasting studio. They launched the luxury live commerce platform 'S.I. Live (S.I. LIVE)' within their own mall, 'S.I. Village', introducing and selling high-end products.

Instead of aiming for the highest sales during the broadcast time, they focus on product curation, carefully selecting products and brands that match the season, trends, and current issues. As a method to enhance the content competitiveness of S.I. Village, they plan to operate strategically in parallel with existing platforms like Naver Shopping Live.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 12

LF Mall also broadcasted the French contemporary brand 'Officine Generale' in November after collaborating with Naver and Kakao. LF is planning to strengthen live broadcasts through LF Mall, not only collaborating with portals.

Kolon Industry FnC Division is enhancing the non-face-to-face shopping area of its own mall apart from Naver.

In Kolon Mall, four live broadcasts were conducted over four weeks from October 25 to November 15 last year. The themes were 'Fleece', 'Coats', 'Accessories', and 'Down Jackets', and these broadcasts recorded a cumulative audience of 33,000. Over the total four weeks of live broadcasting, they achieved 25% higher sales compared to the previous year, proving its potential.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 13

Currently, fashion companies are mainly venturing into sales through collaboration with high-traffic portals like Naver and Kakao. This is because strategic partnerships with portals allow for simultaneous revenue and brand marketing. Babafashion's own mall 'Babada.com' recorded the highest sales in Naver Shopping Live's fashion category with 300 million and over 100,000 concurrent connections during the special broadcast on November 18, causing a huge buzz and successfully broadcasting.

Coupang Jumps into the Spotlight of Shopping Live Commerce | 14

Babada.com, following its success in the special Naver Shopping Live, has decided to strategically conduct Shopping Live with Naver this year.

Moon Gun, CEO of the live broadcast commerce platform 'Ot-bang (Clothes Shop Broadcast)', mentioned, "The domestic live commerce market is still in its early stages with very high potential for development. As smart devices evolve, traditional VOD methods are changing to real-time formats, and with the addition of two-way communication, the commerce method is changing to match recent consumer trends."