Why Gmarket?
Article 1:Gmarket Eclipses eBay in Asia
Gmarket’s growth momentum: For Gmarket, the first-quarter performance translated into revenues of $29.6 million, most of which came from transaction fees. That’s about three times the sales performance of the year-ago period. In 2005, revenues from transaction fees, advertising, and other earnings totaled $59.3 million, about a fivefold jump from 2004. “Gmarket has taken everyone by surprise,” says Park Kyung Min, CEO at fund manager Hangaram Investment Management. “No one had expected it to be a credible force when it began providing an online open market in the fall of 2003.”
How Gmarket formed an alliance with Yahoo: Gmarket will gain access to even more capital with its Nasdaq public offering, set for the first week of July, by which it hopes to raise $100 million. “The Nasdaq listing, instead of an initial public offering in Korea, underlines our determination to grow in international markets,” says Jo Chang Sun, Gmarket senior vice-president in charge of business strategy. “Our partnership with Yahoo will help us save time and cost in our overseas push.”
In fact, the Yahoo and Gmarket alliance will target other markets in Asia. When the deal was announced, Yahoo Chief Operating Officer Dan Rosensweig said: “We look forward to working with Gmarket to leverage their e-commerce expertise to further expand Yahoo!’s leading position in commerce in Asia.” Gmarket executives say they are tentatively planning to set up an overseas subsidiary in an unspecified Asian country either late this year or in 2007. Part of Gmarket’s IPO proceeds will be used to finance its overseas growth.
The partnership got off the ground last summer when Yahoo co-founder Jerry Yang caught up with Gmarket’s CEO Ku Young Bae at an Internet conference hosted by Alibaba.com founder Jack Ma in Hangzhou, China. Yang was apparently impressed enough at that meeting for serious talks to begin about an alliance.
Gmarket tactic 1 - shopping is fun: So what attracted Yang’s attention? For one thing, Gmarket’s business model places less emphasis on an open auction format than eBay’s. The company offers goods that one can order at fixed prices, with an option to negotiate prices with a seller on an exclusive basis. This allows buyers to conclude deals instantly instead of requiring them to wait until all bids are completed in open auctions. That option is available on eBay as well, but at Gmarket open-bidding auctions account for less than 10% of overall sales volume.
More important, Gmarket has introduced a number of marketing initiatives to differentiate itself from eBay. “We wanted to make sure those who sell their products at our site have marketing tools to promote their goods,” says Jo. “We refused to limit our role to a provider of an e-market place and an agent of attracting buyers and sellers.” The aim is to provide new features constantly at the e-commerce site. Such tactics give sellers various options to attract consumers’ attention to their products and at the same time offer some fun to shoppers to encourage them to come back.
Gmarket tactic 2 - promotion is the king: One such marketing program is a lottery called “lucky auction.” It gives buyers chances to buy everything from LCD televisions to T-shirts at a fraction of the market value. A seller promoting an MP3 player, for example, invites consumers to bid for two of them within a given price range—usually less than 10% of the retail price. Then Gmarket’s computer picks two bids at random to decide the winners. Others visitors can buy the MP3 player at a special offer price. The seller attracts consumers, while Gmarket happily hauls in commissions.
Another incentive at Gmarket is that retailers can offer online links to their own mini homepages within the site, issue discount coupons, run joint mileage points programs, and use an internal messenger service called G-messenger for instant chatting with sellers. Some shops listed on the site have also drawn traffic by promising to donate 10 cents to a favored charity every time a product is sold.
Article 2: Could Gmarket Appeal to Japanese Consumers?
Gmarket eyes the Japanese marketplace: Nasdaq-listed Gmarket is pressing ahead with its campaign to outshine global powerhouse eBay and grab leadership in South Korea’s e-commerce. The Korean upstart on August 9 posted a 163% jump in gross merchandise value, or the total value of goods sold on its website, in the quarter that ended in June. The turnover of $573 million, which compares with $217.8 million in the April-June period last year, represents 16.8% of Korea’s retail Internet commerce, up from a share of 8.3% a year earlier.
Internet Auction, eBay’s Korean subsidiary, doesn’t release quarterly results. But industry officials say Gmarket, which is 9.1% owned by Yahoo!, could have edged past the American giant in terms of the volume of items they handled in the second quarter. “eBay’s growth is pretty decent, expanding by more than 50% in 2005 from the previous year,” says Lee Duck Jun, Gmarket’s chief financial officer. “We are growing at much faster pace, though.”
With its gross merchandise value for all of this year projected to reach $2.4-2.6 billion, Gmarket is now planning to set up a cyber open market in Japan in the first half of next year. eBay pulled out of the Japanese e-commerce market, Asia’s biggest, a few years back, after being badly beaten by Yahoo’s Japanese subsidiary. A joint venture with Yahoo is one option considered by Gmarket for its Japan operation but the Korean company doesn’t rule out the possibility of setting up a wholly-owned unit to compete with Yahoo as well as Rakuten there.