Naver, the no. 1 web portal and search engine in Korea is building its basis for the commerce business through its coupon service, Naver Checkout Coupon. Naver Checkout is very similar with Google Checkout service, which is the payment platform that simplifies the total payment process by registering a credit card number to Naver ID. The company is providing three kinds of coupons which enable Naver Checkout users to get discount benefits when they buy products at Naver shopping website.
From making the payment platform, Naver Checkout to launching a coupon service, Naver is aggressively driving its open market service. For a long time, Naver has raked money from e-commerce sites for a referral fee. But a few months ago, G-Market and Auction(Korea), the 1st and 2nd largest open market service provider, withdrew their product lists from Naver shopping site and made their own shopping search service. And 11st, the 3rd largest open market provider is undergoing its own marketing promotion that provides several benefits for direct buyers without using Naver search engine. But it’s not the only reason that Naver has stepped into the commerce and payment business.
Leverage with Powerful User Base
Naver has gathered 34million internet users through its unique Q&A service, ‘Jisik-in (meaning people with knowledge) is one of the easiest ways to leverages its users. Under this strategic choice, Naver made its payment platform for acquiring the differentiated competitiveness and profitability.
Business Expandability
Though commerce and payment business are rapidly increasing and the market of those industries are getting bigger, it is not enough reason for Naver to pursue this market. Rather, we should know the fact that Naver is the largest online advertisement platform provider. But online advertisement market is about to saturate and other markets including mobile area are growing now. A local advertisement market especially may be very attractive to Naver as we’ve seen Google’s trial in Portland, US.
If Naver forms a relationship with SMBs, it would be very easy to grab a local advertisement market with its traditional search engine. So Naver gathers SOHOs into its shopping site as well as big players of e-commerce.
But, there is still a long way for Naver to get firm ground in the commerce and payment industry as did in the internet industry. The company doesn’t have a lot of sellers compared to its rivals. And most of all Naver is a late-runner with little know-how. So for the time being, Naver will focus on the basic area such as gathering sellers and stably increasing the market share.