Korea's social commerce trio turn to open markets for growth
WeMakePrice announces ‘seller market’ launch set for Friday
By Won Ho-jungPublished : Dec. 12, 2017 - 15:42
Social commerce platform WeMakePrice announced that it has set the launch of an open market-style “seller market” for Friday, becoming the last of the so-called Big Three in social commerce to turn to open market operations for growth.
The “seller market” will combine elements of open markets, which simply connect sellers with buyers, and social commerce, which offers products selected by merchandise buyers at low prices to achieve large sales volumes.
“This is not a simple transition to open market,” said an official with WeMakePrice. “We will maintain our strengths as a social commerce platform by sharing responsibility with sellers in customer service and sales.”
Unlike pure open markets, WeMakePrice’s seller market will require sellers’ products to undergo an internal evaluation before being uploaded to check for products that are controversial or had not received safety certifications.
The move seems to acknowledge past criticisms of open markets for being ineffective in removing potentially problematic products from their sites. For example, when controversy broke out over the potential toxicity of products like diapers this year, e-commerce platforms could not completely remove those products from their sites, but only recommend to sellers that they take down their products voluntarily.
WeMakePrice’s “seller market” would have the platform share responsibility for products offered by sellers and give the platform more control over what is available on the site.
Ahead of WeMakePrice, social commerce site Tmon had also announced that it would be introducing an open market-style platform in mid-December. Coupang, which also began as a social commerce site, transitioned to an e-commerce platform in February to focus its energies on its direct selling business and open market-style item market.
“We decided that our open market and direct selling services were the most effective in promoting customer satisfaction, and we saw that business grow by 2,400 percent,” a spokesperson for Coupang said at the time.
“Social commerce has a lot of disadvantages when compared to open markets,” commented an official with one e-commerce platform who asked to remain anonymous. “Consumers today are becoming smarter, and they’re not just looking to chase down the lowest prices. They’re going to spend their time on sites that give them the most options. Open markets are able to handle much more product volume at once, which not only keeps customers on the sites longer but also brings in more customers through search engines like Naver.”
Earlier this year, Tmon followed Coupang’s footsteps in getting rid of a policy that promised to compensate consumers if they found a product sold on Tmon being sold on another platform at a lower price.
Instead of a race-to-the-bottom style of competition that has led to huge losses for all three companies, the focus by the social commerce-born Big Three has turned to procuring consumer loyalty through service quality, particularly in the realms of fast and reliable delivery.
Last year, WeMakePrice saw 63.6 billion won ($57.6 million) in losses, while Coupang and Tmon respectively saw 565 billion won and 158 billion won in losses. Coupang and Tmon’s performances were linked to large-scale investments in their direct selling businesses.
By Won Ho-jung (hjwon@heraldcorp.com)
The “seller market” will combine elements of open markets, which simply connect sellers with buyers, and social commerce, which offers products selected by merchandise buyers at low prices to achieve large sales volumes.
“This is not a simple transition to open market,” said an official with WeMakePrice. “We will maintain our strengths as a social commerce platform by sharing responsibility with sellers in customer service and sales.”
Unlike pure open markets, WeMakePrice’s seller market will require sellers’ products to undergo an internal evaluation before being uploaded to check for products that are controversial or had not received safety certifications.
The move seems to acknowledge past criticisms of open markets for being ineffective in removing potentially problematic products from their sites. For example, when controversy broke out over the potential toxicity of products like diapers this year, e-commerce platforms could not completely remove those products from their sites, but only recommend to sellers that they take down their products voluntarily.
WeMakePrice’s “seller market” would have the platform share responsibility for products offered by sellers and give the platform more control over what is available on the site.
Ahead of WeMakePrice, social commerce site Tmon had also announced that it would be introducing an open market-style platform in mid-December. Coupang, which also began as a social commerce site, transitioned to an e-commerce platform in February to focus its energies on its direct selling business and open market-style item market.
“We decided that our open market and direct selling services were the most effective in promoting customer satisfaction, and we saw that business grow by 2,400 percent,” a spokesperson for Coupang said at the time.
“Social commerce has a lot of disadvantages when compared to open markets,” commented an official with one e-commerce platform who asked to remain anonymous. “Consumers today are becoming smarter, and they’re not just looking to chase down the lowest prices. They’re going to spend their time on sites that give them the most options. Open markets are able to handle much more product volume at once, which not only keeps customers on the sites longer but also brings in more customers through search engines like Naver.”
Earlier this year, Tmon followed Coupang’s footsteps in getting rid of a policy that promised to compensate consumers if they found a product sold on Tmon being sold on another platform at a lower price.
Instead of a race-to-the-bottom style of competition that has led to huge losses for all three companies, the focus by the social commerce-born Big Three has turned to procuring consumer loyalty through service quality, particularly in the realms of fast and reliable delivery.
Last year, WeMakePrice saw 63.6 billion won ($57.6 million) in losses, while Coupang and Tmon respectively saw 565 billion won and 158 billion won in losses. Coupang and Tmon’s performances were linked to large-scale investments in their direct selling businesses.
By Won Ho-jung (hjwon@heraldcorp.com)
