In December last year, the luxury platform 'Luxury Gallery', operated by E-Land Global, ceased operations, and it has been confirmed that the luxury pre-order platform 'Decode' also stopped operations last month. Including Catch Fashion and HanStyle, which closed earlier, four luxury platforms have ceased operations within a year.
Industry analysis suggests that the luxury platforms, which expanded due to the COVID-19 pandemic, have reached a stage of business cessation as accumulated losses mount and the capital market freezes.
According to related industry sources on the 4th, Decode stopped operating its website on the 16th of last month. The company noted, 'We are temporarily shutting down due to site renewal,' adding that 'a transfer of servers and a renewal across the entire service are planned, and it is difficult to announce an exact reopening date.' The fashion platform 'Now in Paris', operated by Encode, also ceased operations for the same reason on the same day.
Launched in 2015, Decode operated by accepting luxury pre-orders for a specific period, producing the ordered items, and then shipping them. Although the delivery period was long, it promoted the fact that prices were approximately 20% lower than market prices, achieving sales of around 22 billion won in 2022. However, as demand in the luxury market shrank and additional funding failed to secure smoothly, sales fell to around 18.4 billion won the following year, resulting in an operating loss of 12 billion won.
According to industry sources, the company is reportedly undergoing restructuring and is in the process of transitioning its business to wellness-related operations.
E-Land Global also ceased operations of its luxury platform Luxury Gallery as of December 26 last year. Luxury Gallery expanded E-Land's retail space that had been operating luxury direct purchase stores offline to online, setting a goal of reaching sales of 500 billion won within three years of its launch.
In fact, the year after its launch, 2021, E-Land Global's global business sector recorded sales of 130 billion won, a 30% increase from the previous year. However, as the demand for luxury goods declined, it seems the business has reached a point of cessation. An E-Land official stated, 'We have decided to suspend the online business to integrate Luxury Gallery, which sold luxury goods through parallel importing, with NC Fix, which sold famous discounted products from overseas,' adding, 'We plan to focus on the off-price store NC Fix.'
NC Fix is an off-price store operated by E-Land at NC Cheongno and Gangseo, selling discounted items from over 200 brands, including luxury and well-known brands, purchased directly at prices 30% to 90% lower than market prices.
Earlier, the luxury platforms Catch Fashion and HanStyle also stopped site operations in March and August of last year, respectively.
The series of shutdowns for luxury platforms is intertwined with market sluggishness. According to the global consulting firm Bain & Company, the global personal luxury market size was estimated at 363 billion euros (approximately 538 trillion won) last year, a 2% decrease from the previous year. The reduction in the luxury market size has not occurred since the global financial crisis in 2008, except during the COVID-19 lockdown period, marking the first time in 15 years. Bain & Company explained, 'This reflects the persistent strength of Japan and gradual improvement in the U.S., along with rapid slowdown in China and challenging conditions in South Korea.'
The intensifying competition as e-commerce companies entered the luxury market is also cited as a cause. Various e-commerce platforms such as SSG.com and Lotte On, which are affiliated with department stores, along with comprehensive platforms like Coupang and Kurly, are strengthening luxury sales, citing reasons like expanding customer touchpoints and service differentiation.
According to industry sources, all three major luxury platforms, Trendy, Mustit, and Balanc, are estimated to have recorded losses last year. A survey by Mobile Index revealed that credit card payments across seven domestic luxury platforms (Okay Mall, Balanc, Trendy, Custit, Decode, Fillway, Lee and Han) decreased by 59% from 2022 to August last year.
Following the unpaid settlement incident involving Timeth (TMON-WEMAKEPRICE), concerns about platforms have spread, making it difficult to secure investments. In the case of Balanc, there were rumors of securing large-scale funds from Alibaba Group in China and ZOZO Town in Japan last year, but no additional investments were made. Consequently, the industry is seeking new growth engines by expanding into the second-hand luxury market or entering the beauty business.
An industry official stated, 'With the decline in luxury demand and controversies over counterfeit products on some platforms, there is a noticeable trend favoring department stores or department store malls,' adding, 'If the current situation persists, other platforms may also face visible restructuring.'