Shinsegae Group's e-commerce platform Gmarket will establish a joint venture with the Chinese e-commerce platform AliExpress Korea and begin joint management.
According to industry sources on the 26th, Shinsegae Group's E-Mart held a board meeting on this day and approved a proposal to establish a joint venture (JV) with Alibaba, each contributing 50% in kind. The joint venture, scheduled to be established in 2025, will incorporate Gmarket and AliExpress Korea as subsidiaries. Gmarket and AliExpress Korea will continue to operate independently as platforms.
According to industry reports, Shinsegae is expected to contribute all of the 80% equity it holds in Gmarket, while Alibaba will contribute 300 billion won in cash in addition to its stake in AliExpress Korea. The corporate value of the joint venture, as estimated by both sides, is about 6 trillion won.
In June 2021, Shinsegae acquired 80.01% equity in Gmarket for about 3.44 trillion won. In the first year of the acquisition, Gmarket recorded a profit of 4.3 billion won, but incurred losses of 65.5 billion won in 2022 and 32.1 billion won in 2023. The cumulative deficit has continued into the first three quarters of this year.
Chung Yong-jin, chairman of Shinsegae Group, previously hired Jung Hyung-gwon, former head of Alibaba Korea, as the new CEO of Gmarket in June. Jung served as the head of Alibaba Korea and as the representative for Alipay in Europe, the Middle East, and Korea, as well as a finance executive at Coupang after working at Goldman Sachs and Credit Suisse.
Shinsegae noted that through this joint venture, Gmarket will establish a foothold for sellers to enter the global market, and the IT accumulated by Alibaba International will upgrade Gmarket’s IT technology to a global level, thereby enhancing investment in the Korean e-commerce market, which will help rebuild core competitiveness. It is anticipated that investment in expanding product variety, enhancing price competitiveness, and improving personalized shopping will significantly increase consumer convenience and benefits.
In particular, it is expected that over 600,000 sellers trading on Gmarket will benefit from expanding into regions including China, the United States, Europe, South America, and Southeast Asia. Shinsegae plans to improve the system to enable Gmarket sellers to more easily access Alibaba International's global platform.
Both companies plan to continue investing to enhance consumer choice and shopping experiences in the domestic e-commerce market. This includes active investments not only in IT and other technological advancements but also in products and pricing to provide Korean consumers with a world-class customer experience in e-commerce.
A representative from Shinsegae Group stated, "With the establishment of the strategic partnership with Alibaba, a foothold for domestic sellers to enter the global market will be established, which will significantly contribute to exploring new markets and expanding the base for K-products." They added that they would actively work on innovating Gmarket's differentiated customer experience by creating a new retail ecosystem.
Meanwhile, the establishment of the joint venture between the two companies is expected to cause significant shifts in the domestic e-commerce landscape. The combination of Shinsegae's distribution network and Alibaba's financial strength is projected to have an impact that could challenge the duopoly of Coupang and Naver.
According to app analytics firms Wiseapp, Retail, and Goods, as of November this year, AliExpress had 9,676,267 monthly active users (MAU), making it the second largest in the e-commerce app sector. There is a significant gap with the first-place Coupang, which had 32,199,655 MAU. Gmarket ranked fifth with 5,623,947 users, following 11st and Temu.