President Lee Jae-myung has pledged to establish a new small and medium-sized enterprise T-commerce (television commerce) channel to expand sales for small and medium-sized enterprises and small business owners, increasing expectations for a recovery in the performance of public home shopping operator Korea Home Shopping and Home & Shopping.
However, existing T-commerce businesses are concerned that the establishment of a new channel amid market stagnation may lead to 'cannibalization' due to intensified competition.
Korea Home Shopping is a public institution under the Ministry of SMEs and Startups, aiming to expand the market for innovative products from small and venture companies and agricultural products through television shopping. Home & Shopping, whose largest shareholder is the Korea Federation of Small and Medium Enterprises, primarily sells products from small and medium-sized enterprises.
Currently, the two corporations operate television shopping channels, but do not run T-commerce channels. T-commerce is a form of home shopping that also uses television as a channel, but it differs from live television shopping as T-commerce involves recorded broadcasts.
The problem is that both corporations have seen stagnant performance since the COVID-19 pandemic. Home & Shopping recorded sales in the range of 430 billion won from 2021 to last year, with operating profit declining from 40 billion won in 2021 to 27 billion won last year. Korea Home Shopping reported sales of 187 billion won and an operating loss of 1.1 billion won last year.
In response, both corporations are advocating for the expansion of sales of products from small and medium-sized enterprises and small business owners by adding a T-commerce channel. Kim Gi-mun, chairman of the Korea Federation of Small and Medium Enterprises, which is the largest shareholder of Home & Shopping, has emphasized that 'a T-commerce channel must be established to help small businesses and small business owners facing difficulties in securing sales channels.'
However, existing T-commerce businesses are worried that adding a new channel amid market stagnation could further shrink the T-commerce market due to intensified competition.
With the decrease in TV viewers due to the emergence of OTT and the activation of the e-commerce market led by Coupang and Naver, both the television shopping and T-commerce markets are in decline. If a new channel is established, the profits of existing businesses could decrease, resulting in the market contracting.
Currently, there are a total of 10 T-commerce operators. Five companies, including SK Stoa, KT Alpha Shopping, Shinsegae Live Shopping, Shopping N.T, and W Shopping, operate T-commerce channels, while another five companies, including CJ On Style, GS My Shop, Lotte Home Shopping, Hyundai Home Shopping, and NS Home Shopping, operate both television shopping and T-commerce simultaneously.
In fact, during the COVID-19 spread in 2021, the total sales of the five T-commerce operators amounted to 1.21 trillion won but decreased to 1.21 trillion won last year. Operating profit, which peaked at 85.1 billion won in 2020, fell to 48.3 billion won last year.
A representative of a T-commerce operator said, 'Rather than adding new competitors to an already saturated T-commerce market, it would be better to consider how to establish a foothold in growing markets like mobile.'
Another representative from a T-commerce company stated, 'The average programming ratio of small and medium-sized enterprise products among existing T-commerce operators is 50-70%, so T-commerce is already playing a role in securing sales channels for small and medium-sized enterprises and small business owners.' He added, 'Establishing a dedicated T-commerce channel for small and medium-sized enterprises does not take market conditions into account at all.'