Sunday, October 17, 2010

Online shopping gets social media jolt

Social media services are the latest online craze, fueled by the public’s love affair with mobile Internet devices such as smartphones and tablet computers, and this has an increasing number of Internet companies dabbling with ``social shopping,’’ which aims to exploit the strength of social networking services in electronic commerce. / Korea Times

By Kim Tong-hyung

The race is on to be the Groupon ( of Korea, as a slew of Internet companies attempt to combine electronic commerce with social networking in what is resulting in a Web discount frenzy.

The growing field of social commerce here had been driven by upstarts and online reservation firms like Wipon (, Daoneday ( and Ticket Monster (, but the latest entrants include major search and online media destinations such as Daum ( 

SK Communications, the operator of the immensely popular Cyworld ( social networking service and the Nate-On instant messenger, is also expecting to get involved in the social commerce game soon, according to industry sources, as it looks to profit from an onslaught of online bargain hunters. 

And the interest is starting to grow beyond the Internet industry. Sidus HQ, a major entertainment agency that controls the business rights for several television stars and singers, is teaming up with location-based Internet service firm Rain-D to launch a social commerce service tentatively named ``Wish Coupon.’’

Industry watchers estimate that more than 100 social commerce services have been launched in Korea over just the past six months, an entrepreneurship craze rarely seen since the days of the Dot-com bubble. 

Most of the current social commerce services mimic the business model of Groupon _ among the fastest growing Internet companies in the United States _ to provide discount coupons on a variety of products and services, usually on the basis of one deal per day for each local area the company operates in. The Korean firms mostly handle coupons for restaurants, movies and performing arts, leisure activities and beauty services and frequently offer deeply discounted rates of 50 percent or larger. 

Although a certain number of people have to sign up for the offer to activate the discounts, it appears that the better-operated social commerce services are experiencing little trouble in drawing a crowd. 

Wemakeprice (, a new service launched by computer games guru Heo Min, said it posted more than 1.5 billion won (about $1.3 million) in revenue just on the single day of Oct. 8 after selling more than 100,000 vouchers for the Everland theme park. 

``Considering the advanced Internet environment of Korea and the vibrancy of other Web services, we believe the market for social commerce services is now around 36 billion won (about $32.4 million) annually and will continue to grow quickly. Despite the quick growth of the country’s e-commerce industry, we believe the online shopping experience can get a lot more simpler, easier and fun for users, and this is the area we are trying to exploit,’’ said Lee Jong-han, the chief executive of Namu Internet, which operates Wemakeprice.

``These services are reshaping electronic commerce and strengthening the offline connections between the companies and buyers. This provides companies more opportunities to build business models with dual strengths both online and off.’’ 

Only a few Koreans were talking about Twitter ( and Facebook ( just a year ago, but social media has since taken hold rapidly after being jolted by the public’s growing appetite for smartphones such as the Apple iPhone and Samsung Electronics Galaxy S.

The social networking services have been bringing dramatic changes to the way people stay connected, broadcast their status and consume information, and the next wave of changes seem to be coming from commerce. 

Daum is expecting to be a disruptive force in the social commerce competition that has so far been in a state of parity. The company, which is the country’s online news destination and currently enjoys an expanding audience for its location-specific services such as local search and online maps, recently acquired mobile applications firm Intomos to secure a building block for a smartphone-centered social commerce service. 

Intomos has built its reputation on barcode-sensitive software downloaded on mobile phones, which allow people to use their handsets as scanners to access information on products they see on the shelves. Daum believes that the products of Intomos and other location-sensitive features will provide it a distinctive edge in its future social commerce services that will likely be based on a limited number of local deals per day. 

SK Communications is expected to take full advantage of its social networking platform built by Cyworld, which has more than 25 million users, to build a differentiated social commerce service. 

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