Inside Kakao, the organization in charge of small and midsize businesses and small merchants is growing. While expanding the business scope is the primary goal, some say it is also a move to keep pace with the current administration's focus on the growth of small and midsize businesses and small merchants.
According to the small and midsize business community and the IT industry on the 20th, Kakao has been expanding an SME-dedicated organization under Chief Product Officer Hong Min-taek since early this year. SME is short for Small and Medium-sized Enterprises and refers to small and midsize businesses. The company is also said to be proceeding with steps to hire people with advertising and marketing sales experience.
The organization discovers and manages small and midsize business and small merchant advertisers and conducts direct sales. It not only plans and proposes sales expansion programs for advertisers and partners, but also develops customized sales strategies by industry. It also analyzes advertising performance data and works to advance services.
The most concrete initiative is Kakao Biz Membership, which officially launches on Dec. 8. For small merchants using Kakao's business services, Kakao handles customer and business management and, in cooperation with companies, provides membership services such as marketing, food material supply, and delivery order management.
If a small merchant pays a monthly subscription fee of 14,900 won to join the membership, they can use affiliated services such as marketing, food material supply, and delivery order management at a lower expense than if they had contracted with each provider individually.
This business model has been discussed at Kakao for years. Start - Up companies targeting small merchants delivered materials outlining partnership plans to Kakao or met directly to propose collaboration models. But Kakao did not move forward. It is difficult to generate significant revenue, and if a problem arises at a partner, Kakao would have to shoulder the risk.
While the expansion of the SME organization aims to strengthen B2B (business-to-business) transactions targeting small merchants, some interpret it as aligning with the government's policy direction to support the growth of small and midsize businesses and small merchants.
Kakao was once seen as the biggest beneficiary during the Moon Jae-in administration. In 2019, with the Democratic Party of Korea at the center, the so-called Tada ban law was pushed forward, and Kakao's subsidiary Kakao Mobility gained a windfall. Tada was a service that operated like a taxi by lending vehicles with drivers.
Kakao also holds bank equity. In Sept. 2018, the Democratic Party of Korea passed the Special Act on Internet-only Banks, which relaxed the separation of banking and commerce regulations (limits on industrial capital holding bank equity) for internet banks only.
On that basis, Kakao rose to become the largest shareholder of KakaoBank. This is why some say Kakao is strategically adjusting its business direction to align with the current administration's stance of supporting small and midsize businesses and small merchants.
An industry source said, "There has been a perception that businesses related to small merchants don't make money, so despite long discussions, the company did not proceed," and added, "If problems arise during the business, the structure forces Kakao to bear the burden."
The person added, "Because of this, there is talk internally that the company is expanding related organizations and pushing the business with an eye on politics."
A Kakao official said, "Matters related to individual departments are not disclosed."