Naver and Shinsegae Group Ramp Up Strategies to Challenge Coupang

In a bold move to capture market share, Naver and Shinsegae Group are escalating their marketing campaigns, aiming directly at Coupang's disillusioned customers. This decision came shortly after Coupang announced a significant 58% hike in its monthly membership fees for new users, a change set to affect current users by August.

Korea Times reported that this price adjustment has sparked a wave of consumer dissatisfaction, providing a ripe opportunity for its competitors.

Naver's Aggressive Campaign

Naver, a leading internet portal and e-commerce operator in South Korea, has swiftly responded by enhancing its Naver Plus Membership offerings. Starting Monday, the company has provided free delivery benefits to its Plus members for three months. This initiative is complemented by a promotional drive targeting new users, offering them free membership for three months provided they haven't subscribed in the past six months. These moves are designed to entice shoppers with the allure of discounts on purchases and reservations made through Naver.

However, industry insiders remain skeptical about these efforts fundamentally shaking Coupang's dominance. With over 14 million subscribers already enjoying Coupang's acclaimed Rocket Delivery service, the competition faces an uphill battle in disrupting this strong consumer loyalty.

Shinsegae Group Targets Sellers in New Campaign

Meanwhile, Shinsegae Group's e-commerce arm, Gmarket, has launched an aggressive marketing campaign targeting sellers in the lead-up to its annual Big Smile Day shopping festival. Participating sellers are promised free advertising, and new sellers receive additional incentives, such as waived usage fees for Shinsegae's logistics centers for four months.

Despite these vigorous marketing efforts, some industry officials doubt whether these actions can significantly challenge the dominance of Coupang and the growing threat from Chinese e-commerce giants. With Coupang's recent subscription fee increase seen as a "highly profitable" move by Citigroup, which now forecasts an increased revenue with minimal costs leading to a substantial rise in adjusted EBITDA, the competitive landscape remains challenging.

Citigroup's upbeat prognosis for Coupang comes amidst these aggressive market maneuvers. It upgraded the company's status to Buy from Neutral and increased its price target by 37%. Despite potential customer pushback from the increased fees, Citigroup posits that Coupang's value proposition, including unlimited same-day or one-day deliveries and discounts on other services, will likely retain its consumer base, according to MSN.

Naver and Shinsegae are making audacious bets to reclaim market prominence in this fiercely competitive environment. Yet, with Coupang's fortified position and Citigroup's optimistic outlook, the effectiveness of these counterstrategies in the long term remains to be seen.

Photo: Coupang Newsroom