Business Management

Hannah Bae (South Korea) - The Rapid, Rowdy Race for the Social Commerce Market

It would be overly simplistic to call Korea's many social commerce sites mere "Groupon clones."

True, U.S.-based Groupon blew the lid off the industry when it launched in Chicago in late 2008, but South Korea has proved to be its own exciting market for such "daily deal" websites - and that was well before Groupon Korea existed.

The perennial market leader has been Ticket Monster, but in mid-August local competitor Coupang claimed it had unseated its top rival in terms of monthly transaction volume. For July, Coupang's total came to 30 billion won (US$26.94 million), quite the climb from its January figure of 6 billion won.

Ticket Monster, meanwhile, made headlines this summer when LivingSocial, Groupon's biggest U.S. competitor, signed a deal to acquire the Korean deal provider. While the financial terms of the acquisition remained private, estimates place Ticket Monster's value in the 300 billion won range.

As for latecomer Groupon Korea, despite aggressive marketing and accompanying page views, its market share shows it's a bit of an also-ran at this point.

So what makes Korean daily deal sites stand out from the American ones that inspired them?

Several different strategies are at work. First off, Korean companies know what Korean consumers want, and it shows in their marketing. The visuals play a large part in advertising each daily deal, showing potential customers what exactly they're buying -- How does a restaurant's food and decor look? What kind of ambiance does a spa have? What kind of hairstyle can a customer get at this salon?

In addition, Korean social commerce sites have expanded from the bread and butter of selling services like, say, a meal at a trendy restaurant. Both Ticket Monster and Coupang have started offering products for delivery, ranging from rain boots to condoms. Often, the offerings are so novel or high-quality, consumers come back every day to check what might be up for sale.

And like all good copycats, the Korean sites have been able to see what works in other markets and apply those lessons at home. For example, We Make Price, another leader in the Korean deal market, has launched a separate page called Private Lounge that offers discounts on fashion, not unlike Gilt Groupe, the U.S. flash sale site for designer goods.

Korean sites have also taken a page from Groupon Now and LivingSocial's Instant Deals to offer their own discounts in a customer's vicinity that are only good for a few hours.

By Hannah Bae, an American journalist based in Seoul. A former intern at the John S. and James L. Knight Foundation, she is a tech enthusiast. You can follow her on Twitter at @hanbae.









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