The collapse of South Korea’s first-generation online platform heralds the beginning of a new era of e-commerce

South Korea's first-generation e-commerce platforms , which have been around since the 1990s, are rushing to sell their businesses as their valuations surge during the e-commerce boom brought on by the global pandemic . On the surface, this looks like a great opportunity for the country's e-commerce pioneers, but behind the scenes, it shows that these old e-commerce platforms are no longer able to compete with new entrants.

Danawa Co., one of South Korea's original e-commerce platforms, is seeking to sell the 51.35 percent stake held by its largest shareholder Sung Jang-hyun (Chairman of the Board) and related shareholders, according to investment banking sources.

Danawa C o. was founded in 2000 as a price comparison platform primarily for computer accessories, but has now expanded to include a wider range of products and the company also operates an online shopping mall.

The company has hired NH Investment Securities as sales manager and recently closed preliminary bidding, attracting about 10 potential buyers.

Another first-generation platform, Interpark Corp., is also looking for a buyer. Since its founding in 1997, the company has been called Korea’s Amazon because of its large influence in the domestic e-commerce industry and established Gmarket , an online shopping platform that was sold to eBay Korea in 2008.

Interpark plans to sell 28.4% of the company's shares held by its largest shareholder Lee Ki-hyung and related shareholders. Trip.com, the world's second-largest online travel platform, and GC Corp., which operates Korea's main accommodation booking app, are expected to participate in the transaction as Interpark has a large market share in Korea's travel and ticket booking market.

Also earlier this year, retail giant Shinsegae Group acquired eBay Korea, which owns shopping platforms Gmarket and Auction. Shinsegae Group's subsidiary E-Mart Corporation acquired about 80% of eBay Korea's shares for 3.4 trillion won.

After this series of events, industry experts said that the first-generation platforms are no longer able to survive in the highly competitive e-commerce market.

Meanwhile, new e-commerce platforms have been successful in generating additional value. For example, Naver Corp., South Korea’s leading portal operator, has been using its vast search data to strengthen its AI-based recommendation tools.

Separately, New York Stock Exchange-listed e-commerce giant Coupang Inc. is emphasizing its advantage in fast delivery by offering fulfillment services in addition to price comparisons.

"The capital market has warmed to e-commerce platforms due to the COVID-19 crisis, and the fact that the first generation of e-commerce platforms are being sold shows that they, too, have accepted that their time has come," said an IT industry official.

South Korea

E-commerce market