Can Coupang survive e-mart?

Coupang is a Korean e-commerce unicorn. Now the legacy retail giants take action to kill the unicorn.

Korean biggest retailer e-mart declared war for the lowest-price for diapers and baby formula, directly targeting Coupang.

Starting as one of the hundreds of local flash deal companies on 2010, and now being backed by 1 billion dollar investment from Softbank, Coupang has been disrupting Korean e-commerce and retail market.  

Standing out of harsh competition among major Korean ‘social commerce’ companies, it emerged as the leader of mobile commerce as the smartphone penetration skyrocketed. It transformed itself quickly from a Groupon-like social commerce to an amazon-like mobile commerce.

Coupang focused strategically on diapers and few everyday commodities with the lowest price and ‘Rocket Delivery’ (one-day delivery service for selected items) to earn enthusiastic customer base among young mothers. Young baby caring ‘moms’ who have no time to go shopping or even turn on a PC for online shopping were the target customers for Coupang. The moms turned to smartphones on their hands and logged in Coupang app to order diapers delivered to the doors of their home.

Diapers were once the most sold item in e-mart. Now they buy diapers from Coupang. Last year, diaper revenue of e-mart plummeted 26%, while Coupang became the No. 1 destination in your mind for buying diapers. .  

It is just one of many indicators that major retailers are left behind the e-commerce players.

So called ‘mart’ (Korean equivalent to Wal-Mart or Tesco) including e-mart, Homeplus and Lotte Mart was the place you go shop for everyday commodities and occupied largest portion for a domestic retail market.

Their revenue ceased to grow while e-commerce still outpaced traditional retailers. According to Statistics Korea, the amount of money spent for online shopping was bigger than that of marts last year for the first time.

So the legacy retail giants began to feel threatened now. President Shin of Lotte, a conglomerates whose business spans from a department store and mart to CVS and TV home shopping to sweets and beverages, urged his executives to innovate “like coupang.”

And it took another bold action. It began ‘SSG delivery’, its own one-day delivery service. You can get your product the day you order if only you ordered it before 3 pm. For this, e-mart opened its second online commerce-dedicated distribution center at Gimpo, near Seoul.

You can see it aims for Coupang’s Rocket Delivery.

So, e-mart is competing Coupang in two areas where Coupang is dominating – lowest price for flagship products young moms care and delivery.

Who will win?

Coupang preempted market with convenient mobile experiences and Rocket Delivery. It played better at online commerce compared to legacy retailers.

e-mart has deeper pocket. It has more resources and stronger brand power. It just began to step into online commerce, so it’s hard to expect the potential of giant.

coupang emart war
from Korean Joongang Daily Retailers wage battle over diaper prices

Once e-mart opened the new era of retail by introducing the Western style retailers. Now Coupang is about to put mobile commerce into a mainstream consumer market, which is the last thing e-mart wants to see. So that’s why the war begins.  



Kakao wants your routes with the launch of navi app

Kakao wants to know your routes with the launch of new navigation app ‘Kakao Navi’, and connect them to serve you while you transport.

Kakao, the operator of Korean No. 1 mobile messenger Kakao Talk, fully integrated its subsidiary mobile navigation app ‘Kim-gisa’ into Kakao family apps.

They revamped the design of Kim-gisa, which means ‘chauffeur Kim’ in Korean and whose developer LocAndAll was acquired by Kakao for 62.6 billion Won (about 50 million dollars) for 100% stake last year.

Now Kim-gisa got that friendly Kakao-themed skin and relaunched as ‘Kakao Navi’.


Kakao Navi


While you can see the familiar Kaka0-yellow and Kakao Friends characters on your new Kakao Navi, the app lets you share the destinations and arrival times.

Kakao said on Wednesday that its best feature is a system that allows users to share information. The company said Kimgisa’s traffic information collection system gathers real-time details, including ongoing events and traffic conditions. Users can share their current location, destination and expected arrival time to people registered as KakaoTalk friends. Through KakaoTalk, friends can receive texted directions to a destination without downloading the navigation app.

– Kakao joins navigation app market with Navi, Korea JoongAng Daily

The social features (, which they like to promote with such PR terms like ‘share’ and ‘openness’) do not seem very new and jaw-dropping.

We want your routes

Still it’s worth noting that they launched Kakao Navi while they try to get into your ‘move’ with transportation-related mobile apps like Kakao Taxi and expected Kakao Driver. They are part of Kakao’s O2O strategy aiming for connecting everyone and everything on and offline.

Taxi-hailing app Kakao Taxi was a great success Kakao has long awaited for years, hitting 57 million accumulated calls and 210 thousand driver users in  9 months since launch. The app used then-Kim-gisa for its navigator for drivers and Kakao Navi now receives real-time traffic information from taxis that use Kakao Taxi.

Kakao is also expected to launch Kakao Driver as early as May, which connects private one-time drivers with those who drink at dinner and want to come back home with their car.

To get what it is, you need to understand so-called ‘substitute driver service’ first. Say you drink a lot at a party, and have a car with you. You don’t want to drunk drive and your driver’s license suspended.

You can call the substitute driver service company and they connect you a driver who will drive your car and take you at backseat home. As a country famous (or notorious) for its exciting nights, the market for substitute driver service is estimated as much as 3 trillion Won (about 24 billion dollars), composed of thousands of small companies and tens of thousands of drivers.

It’s part of Kakao’s O2O strategies

With these transportation apps, Kakao expects complete dominance on your moves and routes. They know where you are, and where you are going when.

The real-time data collected from these apps increasingly improve not only the accuracy and efficiency of individual dispatch but also Kakao’s overall understanding of movements of people. You know it’s precious.

Kakao now wants to make money from so-called O2O or on-demand services. Knowing your routes is essential to facilitate O2O services, which need logistics and last-mile contacts.

Kakao Driver is also expected to earn rapid money Kakao needs. Some analysts estimate that Kakao would earn 100 billion Won (about 80 million dollars) per year through matching fee when it begins the substitute driver business.

Kakao didn’t monetize Kakao Navi and Kakao Taxi, but Kakao Driver is easy to monetize because everybody is already so accustomed to paying for substitute drivers.

It may be a breeze for Kakao, whose revenue went down last year with the decline of mobile game and advertisement business.

It’s revenue in the October to December period edged down 4.85 percent to 241.7 billion won ($202 million) from 254.046 billion won ($212.41 million) in the fourth quarter of 2014. Net profit plummeted 80.2 percent to 10.2 billion won ($8.55 million) in the 4th quarter 2015, reduced to a fraction of the net 51.7 billion won ($43.22 million) in the same quarter 2014. 

Update. Kakao acquired 100% share of Park Square for an undisclosed amount of money, JoongAng Daily reported.(Korean article)

Park Square operates Park Here app which offers parking lot information and reservation among Korean big cities. It helps the parking lot to raise the occupancy rates by connecting drivers and parking lot with vacancies.

Kakao’s another move for getting into a part of ‘transportation’ area. Now it covers navigation, taxi, substitute driving and parking business, almost every aspect of vehicle transportation.

A possible scenario goes like this where Kakao Navi guide you to your destiny and near the destination you can see the information of parking lots nearby provided by Park Here. If you drink at the dinner, you can call private driver with Kakao Driver.

Kakao did not reveal its plans for a newly acquired company or how much it spent for acquisition.


Business of game item trading may be prohibited

The hero of this blog is the Ministry of Culture, Sports and Tourism of Korea. Please. It’s not what I intended.

Anyway, the Ministry of Culture considers banning the online game money/item trading (gold-farming) as a part of comprehensive set of countermeasures for game addiction it prepares. You play more games because you can earn money for playing game because there are game item which can be traded, the logic flows…  The Ministry of Culture considers the item trading as one of important reasons of game addiction.

An industry worth of 1.5 billion dollars a year is about to disappear.

For now, only the trading of game money for s0-called ‘web board’ games such as online poker 0r ‘go-stop’ (popular traditional Korean card game) is illegal. Because there are illegal money exchangers who exchange the game money for real money. That turns the web board games into real gambling which is under tight control of government. Actually, you can gamble only in few government approved casinos in Korea.

Plan A is to ban the game item trading not only for web board games but also for Massive Multiple Online Role Playing Game (MMORPG)s.  Plan B is simply to ban all the item trading. Dedicated item trading sites has no choice but to close their services. Plan A and B is not different in effect because most of game items are traded in MMORPGs.

“This is not a finalized plan, and we are deliberately pondering on whether we should ban the item trading or not given the scale of item trading industry,” said an official of the Ministry of Culture.

The Korean Association of Game Industry, which represents the major game companies does not oppose to government policy to ban the game item trading.

You may purchase games from mobile open market in Korea soon (maybe)

Korean government opened a way for games distributed in global mobile open market (such as Apple Appstore or Google Android Market) in Korea.

The Ministry of Culture, Sports and Toursism  (MCST) is working on to revise the game-related law so that games for mobile open markets are exempted from being rated by Game Rating Board (GRB) for distribution in Korea, according to a report.

This unexpected game/mobile industry-friendly move just came out when the concerns over conflict between Korean game rating regulations and Google’s global business practice are growing. As I posted, GRB recently recommended Google to let all the games in their Android Market to be rated according to Korean law and referred possibility of blocking access to Android Market from Korea. Google Korea did not want to follow the regulations because they did not want to run Android Market in the exceptional way only in Korea. They requested about 2 weeks to discuss this issue with headquarter in Mountain View, California.

Korean government eased the regulations for mobile open market

Those  games exempted from GRB ratings may include a) games for mobile open market b) games for youth c) games produced by an individuals or small companies  d) games whose volume is under 300MB. They will be filtered by the appstore operators before launch and GRB will engage only for when games are reported as being violent, obscenity or simulated gambling.

Though the games for open market will be exempted from rating by GRB, it does not mean that those games are completely free from rating. The responsiblity of filtering games is moving from GRB to each appstore operators, an official of GRB said.

The Korean government did not change whole game regulation frame that requires every game for service in Korea should be rated by GRB, but rather found a compromise in the frame of the Law On Promotion of Game Industry. The revision of this law, now pending in the Assembly, includes the clause that defines a few cases that ratings from GRB are exempted by the decision of Minister of Culture. MCST will let the minister of culture determine the exact cases that ratings by GRB are exempted on the basis of the revision of the Law On Promotion of Game Industry.

It means that games cannot be distributed in the mobile open market in Korea for a while if the law is not passed in the assembly. Ministry of Culture and GRB expect that the law will be passed in April. Hopely. But the game law is not on the top of priority list for congressmen. Opposing party wants to fight against so-called ‘Broadcast Controlling’ of President Lee’s government.

Moreover, the attacks against games are getting fierce as the horrible accidents related with online game recently shocked the public. Some congressmen already prepare the law to prevent the game addiction. Those issues may hold back the legislation of revised game law.

What if Google still refuse to follow…

One more ting. Even if the law will be implemented, it’s not clear whether Google followed the Korean game policy. Apple will have no problem in opening the games category in Korean Appstore, because the new regulation is exactly the same as they do now for game developers.

But Google may refuse to the law if they still decide to consider the eased regulation as the infringement of the freedom of speech.  Though the Ministry of Culture did not fix how it operates its open market policies, chances are government may impose some sort of responsiblity to filter the games before launching on open market. That’s not what Google is not doing for their Android Market. Google does not monitor what games are launched on their market, but only handle those games that are reported as having problems by the users.

Now, it’s turn that Google reply.

Shutting down of Android Market in Korea Delayed for 15 days

Google Korea requested Korean Game Rating Board (GRB) to defer deadline for the reply to GRB’s ‘recommendation’ that required Google to block the access to unrated games in Google’s Android Market.

Google Korea stated that “We are closely cooperating with headquarter to reply to GRB soon.”

“‘Soon’ is usually accepted as ‘within 15 days’,” the official of GRB said. It meas we have another 15 days to wait to see whether Google really shuts down the Android Market in Korea.

I mentioned the Youtube case in earlier post, but this case is slightly different from the Youtube blocking issue. Google framed the Youtube issue as a matter of ‘freedom of speech’. But this time, game rating is rather a business process issue.

Can I upload video to Youtube with my iPhone?

Some of you may know that you cannot upload videos clips and replies to Youtube in Korea.

It is because Korean law that requires every internet services with more than 100,000 users per day should confirm users’ identity to upload a posts  or replies. Once you identify yourself, then you can write  with your nickname.

Rather than complying with Korean regulations, Google Korea chose to block uploading from Korea in April 2009 when it approached the 100,000 user bar. “Don’t be evil.”

But don’t worry. You can upload videos or replies by simply changing your ‘Country Preference’ to another countries other than Korea.

Still annoyed? Then why don’t you take a shoot with your iPhone and send it to Youtube? It is no problem to send a video clip from your iPhone.

Nobody cared whether you could upload a video to Youtube with iPhone in Korea, till Google removed Youtube upload function from Motorola ‘Droid’, the first smartphone with Google’s Android OS in Korea. Google removed the functions over the concern for the Korean user-identifying regulation.

After the iPhone-to-Youtube issue aroused, KT, the Korean carrier which provides iPhone, considered blocking video uploading from iPhone. KT also postponed launch of new Android smartphone from LG Electronics because it had the direct Youtube uploading function.

But the chances are it ends up with just a silly fuss, as Korean Communication Commission (KCC) does not take it seriously. “Youtube is not subject to the Korean regulation that requires user identification because videos uploaded from iPhone go directly to Youtube global site, and Google Korea is not involved in the operation of Youtube,” said an official of KCC.

Google refuses Korean game rating system

I did not intend this blog dedicated to Korean ICT policies. But all of my posts till now are about the conflict between technology and regulations.

Maybe it’s because we, Koreans, suddenly began to recognize that we have been in IT Galápagos Island. Well, anyway, here’s another post on conflict between Korean policy and global IT business practice.

Google refused to obey the Korean law that requires every game for service in Korea should get ratings from Game Rating Board (GRB), the Korean equivalent of ESRB or PEGI (but under control of government). About 4400 games are being distributed in Google’s mobile app store, the Android Market in Korea. These games are all illegal according to Korean law because they don’t get rated by GRB, though they have no problem in all other countries in the world.

On 10th March, GRB officially recommended Google to follow the Korean law. GRB referred possible blocking access for games category of Android Market from Korea. Accusation is also an option on the table for for when Google will not change their mind. “Every company operating in Korea should obey the Korean law,” said an official of GRB.

But it seems Google does not want to follow the Korean system. “Google operates Android Market in the same way in every country. We can’t offer different service only for one country,” said an official of Google Korea. “Developers are responsible for their games and if somebody reports games for their offensiveness or other problems, then we can handle the matter. Blocking game service in Android Market will not protect the users,” the official added.

The same controversy aroused for Apple AppStore when iPhone was officially released in Korean last November. Apple cleared the issue by shutting down the game category in Korean AppStore. A few GRB-rated games are distributed in Entertainment category. Korean gamers cannot play most of charged games in AppStore. How poor they are! Please offer warm consolations when you happen to meet Korean iPhone users.

And Google took one step further. No ratings, no voluntary shutting down the game category. “And I did it my way.”

Is it possible to block the access only to games category? Not technically impossible, but “it is difficult to shut down only one category of one country,” said another official in Google Korea, according to a report. Even if Google chooses to shut down the game services, it takes time to adjust system and may result in temporary closing down of the whole market.

Moreover, even if Google change their mind to follow the Korean law, it creates another problem. If Google (or Apple) decides to let the games in their mobile markets rated, how can GRB handle the process? They estimate that GRB can rate 3000 games a year, but thousands of games are registered in these markets every year. You simply cannot deal with them.

That’s why Korean game rating system is out of date, failing to respond to the change of technology and gaming environment.

As mentioned before, every game must be rated by Game Rating Board for distribution in Korea. Every single game!

The system has had some problems, of course. Basically, rating is good  for concluded contents such as movies, songs and video games. But most of the games in Korean are on-line games that need continuous series of patch and updating. Online game developers offer patches several times a day, and they all need re-rating.

The government managed to keep up the rating system, backed-up partly by the public sentiment that are negative to games and required the tight regulation on games. But smart phones and mobile convergence environment have caused big cracks in the system. First iPhone, and now Google Android Market did it.

The government is also not happy with this situation. Government wants individual or small group of developers create their own success in these mobile app eco-system. They regard it as a possible solution for recent unemployment problem. But compulsory rating for every game (even if the game is just a simple flash game) is burden for most of venturous developers with less resources.

ps. one more thing. Microsoft closed its ‘Window Mobile Market Place’ in Korea on January over the concern that games without ratings in the market violate the Korean law.  They submitted the games to GRB for rating. Other Korean AppStore run by phone makers or telcos also let their games rated. Unfair?