Bad news for eBay Korea: Yahoo buys stake in Korea's 2nd largest site Gmarket

[mandy]

South Korea's largest auction site eBay Korea, which accounts for 77% of eBay's Asian revenues, has been under increasing competitive pressure from number 2 site GMarket in recent months.  That pressure is likely to increase after Yahoo purchased a 10% stake in Gmarket yesterday.  GMarket also announced plans to file for a $100 million IPO on NASDAQ,

U.S. Internet firm Yahoo Inc. is buying a 10 percent stake in South Korea's No.2 online retailer Gmarket, giving it a foothold in one of Asia's fastest-growing e-commerce industries.

The deal is Yahoo's latest investment in online retail firms in Asia, and puts it in head-on competition with eBay Inc. in South Korea's $11 billion online retail market, which the U.S. auction giant has long dominated...

"Gmarket is fast catching up with eBay, and it seems to be on track to rise to the top position as early as this year," said Lee Sang-koo, an analyst at Hyundai Securities.

full article: http://www.washingtonpost.com/wp-dyn/con...00285.html

[regic]

Meg Whitman discusses GMarket and provides insight into how eBay develops new features: it steals ideas from the competition and copies them--similar to the way Microsoft has operated in the past.

Noto: Korea - what's up?

Meg: background on korea

Historically we've crushed the competition

Now we face gmarket: integrated into CSE and targeted young female shoppers. Sort by popularity.

We said - those are good ideas, let's copy and use our scale to compete.

We also changed our pricing to be aggressive to win back the sellers that defected to gmarket.

Korea grows, we have taken positive actions. Optimistic we'll battle off another competitor in Korea - our team is top 2/3 in terms of eBay experience/capability.

full article: http://ebaystrategies.blogs.com/ebay_str...par_7.html

[Kristijntje]

A copy of GMarket's $100 million IPO filing with the Securities and Exchange Commission.  The stock will trade on NASDAQ.

full IPO filing: http://www.sec.gov/Archives/edgar/data/1...223fv1.htm

Our Business

       We are a leading retail e-commerce marketplace in Korea offering buyers a wide selection of products at competitive prices and sellers a comprehensive and flexible sales solution. Our e-commerce marketplace is highly scalable and facilitates the sale of products in small or large quantities to a large number of potential buyers in a convenient, cost effective and secure manner. We believe we have developed an established and well-known brand name in Korea as evidenced by both our leading market position and rapid growth. We believe we are a leading retail e-commerce marketplace in Korea based on gross merchandise value, or GMV, which represents the total value of all goods sold on an e-commerce marketplace. Further, we believe we are currently a leader in Korea in terms of monthly unique visitors among e-commerce retailers. We derive our revenues primarily from transaction fees on the sale of products on our website as well as from advertising fees and others. Our e-commerce marketplace is located at www.gmarket.co.kr.

       We believe our rapid growth is attributable to our ability to facilitate interaction among a growing critical mass of buyers and sellers. We believe sellers are attracted to our website for our cost effective, end-to-end sales and marketing channel and access to a broad audience of buyers. We believe buyers are attracted to our website as we provide an entertaining and secure shopping environment with more than 1.7 million products currently available for sale in 27 product categories at competitive prices. Some of the products listed for sale on our website include apparel, beauty products, computers, electronics, furniture and jewelry.

       For the month of April 2006, our GMV was Won 168.00 billion (US$172.94 million) and the average monthly unique visitors was approximately 15.3 million for the four months ended April 30, 2006. We had over 8.6 million registered users as of April 30, 2006. We had revenues of Won 70.34 billion (US$72.40 million) and Won 28.34 billion (US$29.17 million) for the year ended December 31, 2005 and three months ended March 31, 2006, respectively. We had net income of Won 5.09 billion (US$5.24 million) and Won 1.93 billion (US$1.99 million) for the year ended December 31, 2005 and three months ended March 31, 2006, respectively.

Our Industry and Opportunity

       Korea is one of the most advanced countries in the world in terms of the percentage of Internet users and broadband Internet penetration rate. The popularity of the Internet and high broadband Internet penetration rate have allowed companies in Korea to generate revenues from a variety of services over the Internet, which has emerged as a popular medium for conducting commercial transactions in Korea, in particular for retail e-commerce transactions. The ability to reach a large number of customers at a relatively low cost has made retail e-commerce an attractive sales and marketing channel. The purchase and sale of goods between and among consumers and retailers have, until recently, been conducted at retail shops, department stores and discount stores. We believe the Internet offers the opportunity to provide an alternative sales and marketing channel for sellers to reach a large number of buyers at a relatively low cost and without maintaining a physical store.

Our Strengths, Strategies and Risks

Our Strengths

       We believe our management team and corporate culture have contributed to the development of the following core competitive strengths:

  • Market leader and strong brand name. We believe we have developed a well-recognized brand name in Korea as evidenced by our leading market position in terms of GMV and monthly unique visitors.

  • Multiple trading platforms. We offer multiple trading platforms: fixed price, fixed price with options, negotiation, group buying and auction.

  • Comprehensive sales solution. We provide to sellers a comprehensive, easy-to-use and flexible marketplace, where sellers can conveniently manage the entire sales process online in one central location and access extensive value-added services.

  • Convenient buying experience. We believe buyers are attracted to our website for the broad selection of products offered at competitive prices in an entertaining and secure environment.

  • Efficient product delivery, tracking system and returns. We have developed a tracking system which enables users to easily check on the delivery status of products and facilitates the quick and cost effective delivery and return of products.
Our Strategy
       Our strategy is to continue to expand and improve on our brand name and leading market position by implementing the following key strategies:

  • Continue to build brand and expand user base;

  • Continue to focus on user loyalty and website enhancement;

  • Continue to expand product categories and introduce new service offerings; and

  • Pursue growth outside of Korea.

Our Risks

       Our business is subject to various risks, which are described in the section entitled “Risk Factors” immediately following this prospectus summary, including:

  • our ability to operate in an extremely competitive industry and address the challenges of managing a rapidly growing business;

  • our inability to successfully implement some or all of our major strategic initiatives in a timely manner;

  • our dependence on certain key members of our senior management team;

  • our ability to prohibit listing or sale by our users of pirated, counterfeit, illegal or regulated items;

  • our inability to address security risks related to online purchases;

  • our inability to adapt or expand our existing technology infrastructure to accommodate greater trading volume and increased number of products available for sale, including prevention of interruptions or failures of our network and system infrastructure;

  • our inability to improve our system of internal controls, including our experience with U.S. GAAP as well as our accounting and finance resources; and

  • our inability to defend against intellectual property infringement claims and protect our intellectual property rights.    

[mandy]

Yahoo vs. eBay in Asia:

Japan: Yahoo #1, eBay shuts site
Taiwan: Yahoo #1, eBay pulls out
Singapore: Yahoo #1 over distant #2 eBay
Hong Kong: Yahoo #1 over distant #2 eBay
China: Yahoo's Taobao holds 2-1 market share over 2nd place eBay China
Korea: Yahoo's GMarket pulls ahead of former #1 eBay Korea in eBay's biggest Asian market

EBay may be the global powerhouse in the Internet auction arena, but it has struggled mightily in Asia. The $4.5 billion company, which pulled out of the Japanese e-commerce market a few years back, has just announced plans to lay off staff in Taiwan and lags badly behind a local rival in China. Now, eBay's most successful Asian operation is under assault from Korean upstart Gmarket, which is 10%-owned by arch-nemesis Yahoo!...

Just two years ago, eBay's Korean subsidiary, Internet Auction, was the dominant player in South Korea. Internet Auction accounted for 75% of eBay's Asian revenues. Not any more. "Gmarket is neck-and-neck with Korea's hitherto Internet shopping king," marvels Lee Hyun Chang, director at Seoul-based market researcher Metrix.

By one measure, Gmarket has already edged past Internet Auction. In May, Gmarket logged 17.2 million unique visitors, compared to 17.1 million for the eBay unit, according to Metrix. That is a stunning turnaround, given that Gmarket only entered the business in late 2003. In volume terms, Gmarket and eBay each sold about $490 million worth of goods in the first quarter of 2006...

full article: http://www.businessweek.com/globalbiz/co...tm?chan=tc&chan=technology_technology+index+page_more+of+today's+top+stories

[Kristijntje]

Shares of South Korean online retailer Gmarket , which is 10 percent owned by Yahoo Inc. , rose 9.9 percent in their market debut on Thursday, amid hopes for solid e-commerce growth.

American depositary shares of Gmarket traded at $16.76 per share in their first day of trading on the Nasdaq stock market, compared with an IPO price of $15.25, a day after it raised $139 million in an IPO that reached the top end of expectations.

http://yahoo.reuters.com/news/articlehyb..._N29198731&type=comktNews&rpc=44

[mandy]

Update: 1st half 2006 GMV announced.

Gmarket Inc. (NASDAQ: GMKT) announced today that its gross merchandise value ("GMV"), which represents the total value of all items sold on its website, totaled 1.013 trillion Won (approx. US$1.068 billion) for the first half of 2006. This amount is slightly less than Gmarket's GMV for all of 2005, which was 1.080 trillion Won (approx. US$1.140 billion).

Gmarket recorded GMV of 543.75 billion Won (approx. US$573.28 million) for the second quarter of 2006, which is a 260% year-over-year increase from the GMV amount recorded in the second quarter of 2005 of 206.63 billion Won (approx. US$217.85 million).

Gmarket plans to announce its financial results for Q2 2006, which will be prepared in accordance with U.S. GAAP, during the second week of August 2006.

[mandy]

A related article on GMarket:

South Korean online retailer Gmarket takes on eBay subsidiary at home

The thumping pop music and blaring lights at Seoul’s Dongdaemun market keep going all night long as shoppers swarm around merchants hawking the latest trendy fashions at rock-bottom prices.

South Korea’s Gmarket Inc. seems to have captured the energy of that raw commerce and made a home for it on the Internet, creating a Web site that has quickly become a top online destination in this computer-savvy nation. It’s going head-to-head with eBay Inc.’s Korean subsidiary.

Gmarket has drawn the interest of U.S.-based Yahoo Inc., which recently bought a 9 percent stake. It went public in June, offering shares on the Nasdaq Stock Market, and is pondering future expansion, with an eye to entering Japan next year and later moving into China and the U.S...

full article: http://news.bostonherald.com/internation...eid=160230&format=&page=1

[mandy]

A related article:

For Ku Young-bae, outrunning global e-commerce giants Internet Auction and eBay in the home market is like a dream come true. But it does not mean he can kick up his legs and relax.

The president and chief executive officer of Gmarket Inc., Korea's leading retail e-commerce marketplace, is rather at the beginning of building a mountain out of a molehill...

This ambitious goal includes pioneering a "ubiquitous shopping" industry that includes mobile and offline shopping...

full article: http://www.koreaherald.co.kr/SITE/data/h...150032.asp

[Kristijntje]

GMarket releases full year 2006 results:

Gmarket Inc., a South Korean shopping portal which also trades in the U.S. on NASDAQ, grew the value of its gross merchandise sales by 110% in 2006 while total net income rose by 220%.

For the year, Gmarket, which includes Yahoo as a minority owner, posted gross merchandise sales–the value of all items sold online–of $2.45 billion, compared with $1.16 billion in 2005. At the same time net income rose year over year to $17.6 million from $5.5 million in 2005. In the fourth quarter gross merchandise sales increased by 53% to $737.4 million from $480.8 million for the same period in 2005. Q4 net income rose by 79% to $6.8 million from $3.8 million in Q4 2005.

full article: http://www.internetretailer.com/dailyNews.asp?id=21717

[mandy]

Another GMarket article:

As South Korea's e-commerce market has grown over the past few years, small business owners have tried to cash in.

Problem is small- and medium-sized businesses often don't have the financial resources or brand power to develop and sustain their own Web sites, says Young Bae Ku, chief executive of South Korea's GmarketGMKT.

So, many of them sell their wares on Gmarket's Web site, gmarket.co.kr, which is a retail e-commerce marketplace. Gmarket owns no inventory. Rather it hosts transactions between other parties. It helps sellers manage, promote and service transactions.

Owners opt to sell on Gmarket because it offers the advanced sales support and systems required for business sellers, says Ku, compared to the "relatively simple" sales functions occasional sellers need. Gmarket's rivals don't provide such sophisticated support, he adds...

full article: http://money.cnn.com/news/newsfeeds/arti...100738.htm