Social commerce race is intensifying in the United States market. From leading giants such as Amazon and Walmart launching their dedicated social commerce service to Chinese firms such as ByteDance and Pinduoduo seeking to expand their presence in the North American market, the sector is projected to record strong growth over the next 12 months. To capitalize on the high-growth market, global e-commerce firms are also entering into mergers and acquisition deals to enter the United States social commerce industry, while also strengthening their foothold in the global e-commerce market.
Through the strategic acquisition, Naver is planning to combine the social shopping platform of Poshmark with its technological prowess and existing communities, while also gaining a foothold in the North American market. For Poshmark, the acquisition will allow the firm to benefit from Naver's image recognition and search technologies. This will provide an enhanced shopping experience for United States customers.
With Naver’s ad-serving and payments infrastructure, Poshmark will also be able to better serve its international customers. This is the long-term plan of Naver behind the acquisition of Poshmark. Notably, the South Korean giant is planning to expand the presence of social shopping platforms in Asian countries, where Naver operates. By joining forces, the two firms can disrupt the social shopping experience in North America as well as Asian markets over the next three to four years.
In the United States, Naver is optimistic that the acquisition deal will drive the annual revenue for Poshmark beyond 20%, while also saving the firm US$30 million in annual run rate over the next 24 months. These forecasts are on the back of the growing social commerce market in the United States. The acquisition of Poshmark will also assist the firm in its competition with Coupang in the domestic market.
In South Korea, Naver has faced tough competition from Coupang. As part of its strategy to lure shoppers onto its e-commerce platform, Naver has taken several strategic initiatives in the domestic market. For instance,
For the delivery scheme, the firm entered into a strategic collaboration with SK Energy. This partnership will assist the e-commerce firm to establish logistic centers at 3,000 SK Energy gas stations in South Korea. These centers, named micro-fulfillment centers, will use Naver’s artificial intelligence systems to better manage supply chains and logistics effectively.
When it comes to delivery time, Coupang is unrivaled in the South Korean e-commerce market. The firm has more than a hundred fulfillment centers across the country and is seeking to further strengthen its logistical capabilities by adding more delivery people in the South Korean market. In Q3 2022, Coupang turned positive, after losing money for years since the launch of its ultrafast Rocket Delivery service in 2014. During the three-month period, the firm posted a net income of US$90.7 million on the back of strong 18 million active shoppers on its e-commerce platform.
Enhancement in the delivery network is also projected to drive revenue growth for Naver in South Korea. Notably, the growing competitive landscape in the domestic e-commerce market is projected to drive benefits for both vendors and consumers in South Korea from the short to medium-term perspective. From a global perspective, the acquisition of Poshmark will enable Naver to expand its operations in more Asian markets, thereby adding to its revenue growth over the next three to four years.
To know more and gain a deeper understanding of the social commerce market in South Korea, click here.