E-commerce company 11Street has been brought back in as a subsidiary of SK Planet. It comes about seven years after it was spun off in 2018. SK Planet also decided to inject an additional 60 billion won into the returning 11Street. With the top e-commerce player Coupang's position weakened by a massive personal data leak, attention is on whether 11Street can seize the opportunity.
According to the retail industry on the 29th, SK Planet disclosed on the 2nd that it would participate in a 60 billion won paid-in capital increase for its subsidiary 11Street. This is an additional paid-in capital increase carried out after SK Planet acquired equity from SK Square and Nile Holdings. As a result, SK Planet's total capital contribution to 11Street rose to 534.6 billion won.
SK Planet and 11Street plan to work to strengthen synergies within the group. They are envisioning synergies with OK Cashback, the mileage membership platform that SK Planet operates as a key service.
E-commerce industry officials are watching to see whether 11Street can seize an opportunity as Coupang's position has been weakened by a massive personal data leak. Tmon and WeMakePrice are undergoing rehabilitation and bankruptcy proceedings, respectively, and are effectively absent from the market. For its part, 11Street has weathered ups and downs and is now reorganizing its lineup. As recently as 2018, the gap among Coupang, Tmon, WeMakePrice, and 11Street was not large, and they were peers.
The early days of e-commerce player 11Street were not bad. While there was no investment on the scale of the funds SoftBank of Japan put into Coupang, 11Street also had ample cash-like assets. To prepare for an initial public offering (IPO), it transferred liabilities to SK Planet and became independent with only cash-like assets. Including investment funds, 11Street started out with 500 billion won in cash-like assets.
What made the difference between 11Street and Coupang was management decisions on large-scale investment in logistics. Promoting "planned losses," Coupang invested aggressively in logistics and locked in consumers over the long term through memberships. By contrast, 11Street pursued discount events such as ultra-low-price marketing more aggressively. In the end, it is assessed to have lacked learning about e-commerce and platform corporations.
An e-commerce industry official said, "At the time, we focused on marketing funded by investment money to deliver short-term results," and added, "In hindsight, we were blinded by short-term performance and missed a golden opportunity." The point is that 11Street needs a strategy shift.
The gap now is substantial. In the meantime, 11Street has accumulated losses of 440 billion won. It is now difficult to simply compare rankings with Coupang, once considered a rival. Coupang logged its first quarterly operating profit in the third quarter of 2022, 12 years after its founding. In 2023, it posted its first annual profit, 14 years after its founding.
Despite the wide gap, expectations persist for 11Street because there is talk that breaking Coupang's monopolistic business structure in the e-commerce market is necessary for competition and checks to function. For now, there is no e-commerce corporation that can counter Coupang. This is also why Coupang is taking a brazen stance even after leaking consumers' personal information on a massive scale.
A retail industry official said, "Because negative views of Coupang have grown among both consumers and sellers, how to leverage this depends on 11Street and other e-commerce corporations," adding, "If another company offers services similar to Coupang's, there are now sellers and consumers willing to switch."
In addition, outcomes could vary depending on how actively 11Street responds to the online platform fairness act (Onple Act). The Onple Act is a bill to regulate unfair practices by large online platforms such as Naver, Kakao, and Google, and to protect merchants and consumers. Designating market-dominant operators, banning self-preferencing, and capping fees are among the items being discussed under the Onple Act framework.
An investment industry official said, "Because SK Group has semiconductors and telecommunications as its two pillars, it may be thinking of stabilizing the business to a reasonable level and then selling it back to a private equity fund," adding, "However, if it focuses on that kind of work (government affairs), it will be hard to expect a different 11Street than we see now. We need to watch how it will roll out the business."