November 17, 2020 11:23
Competition in Korea's cut-throat online shopping market is getting hotter as Amazon joins hands with SK Telecom's 11st.
Ebay has already bought online shopping malls Auction and Gmarket, while Japan's Softbank is backing Coupang. The Lotte and Shinsegae retail empires operate their own online shopping malls, while other Korean players include Interpark, Wemakeprice and Tmon.
SK Telecom said Monday it will enter a cooperative partnership with Amazon to allow customers in Korea to buy Amazon's products from its local online retailer 11st. A joint global service will become available early next year.
Amazon is to become a major shareholder in 11st. Analysts believe Amazon's investment could increase depending on performance and reach W1 trillion (US$1=W1,109).
Amazon has been weighing the pluses and minuses of entering the Korean market since 2015, eyeing its massive growth potential. According to government data, Korea's online shopping market grew from W38 trillion in 2013 to more than W100 trillion in 2018 and surpassed W133 trillion this year due to the coronavirus lockdown. It is expected to reach W200 trillion in 2021.
But Amazon is wary of the intense competition in Korea and the fact that rivals are already well established and work on tiny margins.
Amazon entered China's burgeoning online shopping market in 2004 only to pack up and leave after 15 years because it could not compete with Alibaba. That is why it decided to invest in 11st rather than strike out on its own here.
One example of the partnership is that online shopping through Amazon's Echo AI speaker can also be accessed from SK Telecom's Nugu, which is used by 7 million customers here. And Amazon's drone delivery service can be achieved with technology from SK Telecom as well.
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