Kakao focuses on fashion platforms as strategy to take on Coupang, Naver Tech giant is in talks to buy online fashion retailer after dropping out of eBay Korea race
Translated by Ryu Ho-joung 공개 2021-04-13 10:31:08
이 기사는 2021년 04월 13일 07:59 thebell 에 표출된 기사입니다.
Kakao Corp is in advanced discussions to acquire online fashion platform Zigzag, said industry sources, after dropping out of the race for eBay Korea, as it turns its eyes to younger consumers who are more sensitive to fashion and trends to take on rivals such as Coupang and Naver in the ecommerce battle.The deal, which is expected to be signed as early as this week, comes a couple of months after rumors emerged that Kakao was exploring takeover opportunities in the online fashion retail space as it felt threatened by Coupang’s advances. The company at the time had also been mentioned as a potential buyer of eBay Korea, which was up for sale earlier this year.
Rumors about two different acquisition targets had circulated in the market because Kakao was internally divided over its strategy to counter ecommerce rivals, industry watchers said. One group supported aggressive investments to catch up with competitors and increase the company’s market share, while the other group argued that the company needed to differentiate its business model from that of Coupang and Naver.
Kakao chose the latter, deciding not to bid for eBay Korea but to bet on a niche of the online fashion retail market.
Kakao’s ecommerce strategy is centered around Kakao Talk. The company thought that the messaging app’s users would be likely to purchase goods online while they are chatting with friends on their mobile phones, which is different from the business model of Coupang and Naver that relies on price-conscious consumers.
This means that Kakao’s business model in the ecommerce market is more sensitive to trends than that of its rivals. That is the reason the company has put a focus on online fashion platforms, with ambitions to expand its ecommerce business by targeting younger consumers, industry watchers said.
Kakao had initially been in talks with shopping platform Ably but they failed to reach an agreement. Shortly thereafter, Kakao approached Zigzag, which is operated by Croquis, about a possible takeover. Negotiations between the two sides have gone smoothly as they share a similar approach to growing businesses, according to sources.
The deal would let Kakao absorb the mobile shopping platform’s customers, mainly in their 20s and 30s. Zigzag has more than 5,000 clothing merchants, with over 10,000 new offerings registered on the platform every day. Its gross merchandise value has grown four-fold in the past four years, to 800 billion won ($711.4 million) in 2020 from 200 billion won in 2016.
Kakao is expected to continue to search for acquisition targets. “Kakao is stepping up efforts to increase its presence in new and niche markets where Coupang and Naver are not dominant, such as fashion and media commerce,” said an industry insider. (Reporting by Eun-jin Choi)
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