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GS Retail to merge with GS Shop as survival bid

A worker at GS25 hands over items purchased online in a soft box to a delivery man at a convenience store in Seoul, on Oct. 14. / Korea Times file
A worker at GS25 hands over items purchased online in a soft box to a delivery man at a convenience store in Seoul, on Oct. 14. / Korea Times file

By Kim Jae-heun

Every day the local e-commerce scene experiences an upheaval as the COVID-19 pandemic has changed people's shopping habits, moving them online.

Coupang instantly gained momentum with its overnight Rocket Delivery service to become a leading player along with Naver, which was ranked No.1 in the market last year, beating out Coupang and eBay Korea with a gross merchandise value of 20 trillion won

This year, the firm's business performance is predicted to show 51.6 percent growth compared to 2019 and record 30.3 trillion won in gross merchandise value.

GS Group, which operates both the No.1 convenience store brand GS25 and top TV home shopping firm GS Shop, decided to merge the two last week as a move to survive in the ever rapidly changing e-commerce field.

The company believes combining the on-and-offline firms will promote synergy by putting customer services, distribution channels and logistics all under one management. Under the "omni-channel" strategy GS Group believes it can bring its sales up to 25 trillion won in the next five years.

Opinions are divided on the outlook for GS Group as the company has not yet revealed any detailed plans.

GS Retail has strength in offline channels such as its convenience stores, supermarkets, hotels and health & beauty business. GS Shop and GS Fresh Mall run online businesses and GS Group said combining the two will allow it to provide a consistent service experience to customers while collecting big data to analyze their shopping behavior.

It will also help the company to increase its buying power enabling it to place larger orders that the company will be able to sell via an increased number of channels.

However, industry insiders say this is not that easy. The convenience stores are owned by individual businesses and GS Retail cannot force them to sell any items they want unless the store is directly managed by the company. Also, if similar products are sold at all convenience stores and online malls as well as on TV shopping platforms, this can lead to cannibalization.

CJ O Shopping and CJ ENM merged in 2018 with the hope that they could grow into a content commerce firm but they have yet to achieve any notable outcome.

Lotte is a pioneer in pursuing the "omni-channel" strategy by gathering its customers on its digital platform Lotte ON. It tried to establish a perfect fulfilment system by allowing customers to order groceries online and collect them at nearby gas stations or have its fast food chain riders deliver the items. However, this has yet to gain traction.

"By simply combining on-and-offline channels, instant synergy is not necessarily there. This has been proven with the results of SSG.com and Lotte OO, which are struggling to chase after Naver and Coupang. Each channel has its own strengths in selling specific items. GS Retail has to focus on maximizing the advantage of its different platforms," an industry source said.


A worker at GS25 hands over items purchased online in a soft box to a delivery man at a convenience store in Seoul, on Oct. 14. / Korea Times file
A worker at GS25 hands over items purchased online in a soft box to a delivery man at a convenience store in Seoul, on Oct. 14. / Korea Times file

By Kim Jae-heun

Every day the local e-commerce scene experiences an upheaval as the COVID-19 pandemic has changed people's shopping habits, moving them online.

Coupang instantly gained momentum with its overnight Rocket Delivery service to become a leading player along with Naver, which was ranked No.1 in the market last year, beating out Coupang and eBay Korea with a gross merchandise value of 20 trillion won

This year, the firm's business performance is predicted to show 51.6 percent growth compared to 2019 and record 30.3 trillion won in gross merchandise value.

GS Group, which operates both the No.1 convenience store brand GS25 and top TV home shopping firm GS Shop, decided to merge the two last week as a move to survive in the ever rapidly changing e-commerce field.

The company believes combining the on-and-offline firms will promote synergy by putting customer services, distribution channels and logistics all under one management. Under the "omni-channel" strategy GS Group believes it can bring its sales up to 25 trillion won in the next five years.

Opinions are divided on the outlook for GS Group as the company has not yet revealed any detailed plans.

GS Retail has strength in offline channels such as its convenience stores, supermarkets, hotels and health & beauty business. GS Shop and GS Fresh Mall run online businesses and GS Group said combining the two will allow it to provide a consistent service experience to customers while collecting big data to analyze their shopping behavior.

It will also help the company to increase its buying power enabling it to place larger orders that the company will be able to sell via an increased number of channels.

However, industry insiders say this is not that easy. The convenience stores are owned by individual businesses and GS Retail cannot force them to sell any items they want unless the store is directly managed by the company. Also, if similar products are sold at all convenience stores and online malls as well as on TV shopping platforms, this can lead to cannibalization.

CJ O Shopping and CJ ENM merged in 2018 with the hope that they could grow into a content commerce firm but they have yet to achieve any notable outcome.

Lotte is a pioneer in pursuing the "omni-channel" strategy by gathering its customers on its digital platform Lotte ON. It tried to establish a perfect fulfilment system by allowing customers to order groceries online and collect them at nearby gas stations or have its fast food chain riders deliver the items. However, this has yet to gain traction.

"By simply combining on-and-offline channels, instant synergy is not necessarily there. This has been proven with the results of SSG.com and Lotte OO, which are struggling to chase after Naver and Coupang. Each channel has its own strengths in selling specific items. GS Retail has to focus on maximizing the advantage of its different platforms," an industry source said.


Kim Jae-heun jhkim@koreatimes.co.kr


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