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eBay Inc. signage at the entrance to the company’s headquarters in San Jose, California, U.S.
David Paul Morris/Bloomberg
South Korean retail giant Shinsegae, led by a daughter of Samsung’s founder, has agreed to acquire eBay’s Korean business for $3 billion in a move to win market share in the country’s increasingly competitive e-commerce market.
Shinsegae’s supermarket affiliate, E-Mart, will acquire 80% of eBay Korea, the U.S. e-commerce site said in a statement last week. The deal allows eBay Korea and E-Mart to set up an ecosystem that sells everything from groceries to general merchandise, the statement said. The deal will also enhance E-Mart’s same-day delivery capability and improve the use of capacity at its warehouses for goods to be shipped by e-commerce.
Shinsegae is making its move as Korean e-commerce revenues rise. According to research firm Counterpoint, Korea’s e-commerce market has expanded 250% since 2016. A surge in online shopping during the Covid-19 pandemic grew e-commerce revenues globally. The top e-commerce companies in Korea, by market share, are internet giant Naver (16.5%), Coupang (13%) and eBay (12.4%), according to Counterpoint.
“eBay Korea is the third-largest e-commerce firm in the South Korean market, so the acquisition will immediately propel Shinsegae Group into a leading e-commerce market leader in South Korea,” says Rajiv Biswas, Asia-Pacific chief economist with research firm IHS Markit.
Naver leads because of the age and depth of its mass market internet services that smoothed its way into e-commerce, says Mijung Kang, manager at Counterpoint. Coupang gained ground in March with a $4.6 billion initial public offering in New York, the biggest U.S. listing of any Asian company since Alibaba’s 2014 IPO.
Shinsegae intends to cooperate with Naver and will invest more than $650 million over the next four years in a fulfillment service center, says Dongkeun Yi, an analyst at Counterpoint. The retail giant is led by chairwoman Lee Myung-hee, the youngest daughter of late Samsung Group founder Lee Byung-chull. Lee Myung-hee’s son, billionaire Chung Yong-jin, is vice chair of the company.
Shinsegae also stands out for its own cold chain, says Nyunsoo Na, an analyst with research firm IDC, referring to the temperature-controlled storage and shipping of products. “Based on their own offline channel and infrastructure, it seems that the company has a priority in (cold chain),” Na says. “With eBay Korea IT engineers and members, they will be able to expand their cold chain sales.”