Naver Shopping Takes the Lead... First-Generation Open Markets Face Survival Crisis

After the Launch of Naver Plus Store Last Year
Open Market Platforms Face Sharp Declines in Revenue

After Naver launched the 'Naver Plus Store' and intensified its e-commerce operations, existing open market operators appear to be struggling with worsening performance. While the domestic e-commerce market continued to grow, Coupang, which is leveraging its rocket delivery, maintained its strong growth in the direct purchase segment. Meanwhile, Naver Shopping is encroaching upon the open market sector.

According to the Financial Supervisory Service's DART system on August 4, Gmarket, the nation’s first-generation open market, saw its sales drop 38% last year to 740.4 billion won, down from 1.1967 trillion won in 2023. Similarly, 11st’s revenue was cut in half from 865.5 billion won to 437.6 billion won in the same period. Aliexpress Korea also saw a 31.2% decline in sales year-over-year. During this period, Naver Commerce’s revenue increased 44.8%, rising from 2.5466 trillion won in 2023 to 3.6884 trillion won last year.

Fewer New Customers, Higher Costs: The Open Market Dilemma

Naver, the country’s largest search platform, had previously been the leader in the e-commerce market based on transaction volume, but it ceded the top spot to Coupang in 2022, which led the way with rocket delivery and its Wow Membership. Since then, Naver Shopping rebranded to Naver Plus Store and officially launched its app in February last year, pursuing aggressive expansion in the commerce market.

As a result, the open market platform sector is being reorganized around Naver. The gap is widening, especially in the competition to attract new customers. According to IGAWorks Mobile Index, in June, the Naver Plus Store recorded the most new installs at 749,581. Coupang followed with 383,182, then Aliexpress with 249,307, 11st with 122,212, and Gmarket with 101,415.

For monthly active users (MAU), Coupang ranked first with 35,091,710, followed by Naver Plus Store with 9,080,451, Aliexpress with 8,012,329, 11st with 8,081,531, and Gmarket with 6,120,163. Industry insiders view that although the existing user base for open markets is being maintained, the widening gap in new customer acquisition is weakening growth momentum.

This trend is attributed to a shift in the standards of platform competition. In the past, many consumers compared several shopping malls to find the lowest price, but these days, factors such as delivery speed, return convenience, and membership benefits are also considered. This has resulted in a duopoly between Coupang and Naver in the e-commerce market. Except for Naver, open markets function as broker-type platforms that connect sellers and buyers, making it hard to directly control delivery, exchanges, refunds, and overall customer experience (CX). For this reason, the quality of delivery and level of service can vary between sellers even on the same platform.

Accordingly, Naver has also strengthened its fulfillment services, supporting sellers from inventory management and shipment to exchanges, returns, and customer service. Naver is also widening the scope of overnight and weekend delivery for N Delivery to boost its logistics competitiveness.

Crossroads for Open Market Survival

Aliexpress succeeded in luring users with its ultra-low price strategy, but faced limitations in building a loyal customer base. Despite expanding its roster of domestic sellers and enhancing customer centers and delivery services, price competitiveness alone was insufficient to shift purchasing habits already entrenched by Coupang and Naver. The more Aliexpress increased discount coupons and advertising to win users, the higher its cost burden became, while cutting back on promotions led to slower growth.

Gmarket and 11st were hit directly by this change in platform competition. Naver channeled search traffic into shopping, and Coupang boosted its logistics strength through its in-house network. In contrast, open markets remain stuck in a seller brokerage model. Lacking both search traffic and a proprietary logistics network, they are inevitably forced to rely on ads and promotions to acquire customers. But if they increase spending, their losses rise, while reducing spending leads to declines in transaction volume and revenue. As the number of users drops, sellers leave, and as sellers decrease, product competitiveness weakens—a vicious cycle that repeats itself. Repeated efforts to scale back operations to reduce deficits have also resulted in shrinking market share.

Gmarket reduced its operating loss from 67.4 billion won to 12.4 billion won last year, but in the first quarter of this year, its operating loss rose again to 69.8 billion won. 11st trimmed its advertising expenses from 110 billion won to 82.6 billion won, and its commission payouts from 282.1 billion won to 204.2 billion won, reducing losses but failing to avoid a shrinkage in scale. Aliexpress continued aggressive marketing, maintaining its user base, but experienced falling sales and failed to secure profitability.

The joint venture launched by Shinsegae and Alibaba still has a long way to go. Age Global Holdings posted consolidated revenue of 229.6 billion won and an operating loss of 119.9 billion won in the first quarter of this year. Although it achieved a gross profit of 156.8 billion won, SG&A expenses topped that at 276.7 billion won. Most of its costs came from commission payouts (128.4 billion won) and advertising expenses (93.7 billion won). By bringing together sellers and products, it aimed for economies of scale, but cost savings have yet to materialize.

An industry official commented, “In the past, you could grow simply by securing more sellers, but now you also need logistics, membership programs, and search competitiveness. The market is growing, but the traditional growth strategy for open markets has reached its limit.”

This content was produced with the assistance of AI translation services.