After abandoning eBay Korea, Kakao turns its attention to young e-commerce platforms

Kakao, which operates South Korea's largest mobile messaging app, may consider acquiring younger e-commerce platforms such as 29CM, Musinsa or Grip after deciding to withdraw from its bid for eBay Korea.

Although Kakao said it is not reviewing any type of acquisition deal at this time, it remains very interested in entering the e-commerce business and is looking for new products to sell .

Contrary to expectations, Kakao did not participate in a preliminary bid for third-largest e-commerce company Active earlier this month, even though the acquisition would have put Kakao in direct competition with Coupang and Naver.

eBay Korea owns e-commerce affiliates Auction and Gmarket, which focus on offering better prices or faster delivery services , and their main customers are people in their 30s to 40s, who have proven to be avid online shoppers.

However, Kakao 's commerce business is concentrated on the mobile communication platform Kakao Talk , and the app's 46 million monthly active users (MAU) naturally flow into Kakao's online shopping pages, such as "gift sending" or "call trading" , etc. Kakao hopes to cooperate with relatively young companies in order to create synergy with its mobile e-commerce platform.

In addition, mid-sized companies such as 29CM , Musinsa and Grip are considered strong candidates . Their marketing strategies are similar to Kakao's, offering new products that are less well known to the public while providing customers with a space to share their shopping experiences online.

The main customers of Style Share, the parent company of 29CM , are Generation Z or the "zoomers" generation , born between 1996 and 2010. The platform was launched in June 2011, encouraging people to actively discuss their shopping experiences in online communities.

Musinsa is one of the largest online shopping malls here, with more than 8 million members as of February and about 5,700 brands selling their clothing on the platform . In 2019, Musinsa's annual gross merchandise value (GMV) was 900 billion won.

Grip is the country’s first real-time commerce mobile app . The service was launched in February 2019, but in just two years, its cumulative GMV has exceeded 24 billion.

The pandemic has driven the trend of online consumption, and more shoppers have begun using Grip to communicate with sellers . As of December last year, approximately 8,200 dealers were selling their products on Grip.

The enterprise values ​​of the three companies have been soaring due to the booming online business . Musinsa's enterprise value is estimated at 2.5 trillion won, making it the most expensive of the three companies, followed by Style Share with an enterprise value of 200 billion won and Grip with an enterprise value of 50 billion won.

Nowadays, acquisitions have become the mainstream of e-commerce companies. Acquiring competitors or companies that have improved their own products to develop themselves is the rule of the market. If Kakao decides to acquire other platforms this time, it will have greater competitiveness in the Korean e-commerce market.

South Korea

E-commerce platform

Acquisition