S.K. company continues to give e-bay-backed Auction a run for its money
The competition to become number one in the South Korean online electronics sales market is fierce. The battle between South Korean G Market and the U.S. company Auction is heating up. While both claim absolute superiority, they remain locked in a close battle. Even industry specialists squabble over which company is on top. One point of certainty is that G Market’s rapid growth is a threat to the once-absolute dominance of e-bay subsidiary Auction. German Deutsche Bank released an analysis stating that in South Korea, "Auction still leads the market, but the distance separating it from G Market is narrowing." The momentum of G Market is almost scary. Since its founding in 2000, it has shown breakneck growth. Its pace shows neither signs of hesitation nor deceleration. The age of having 10 million registered members is almost at hand, as last May G Market membership passed the nine-million mark.G Market’s sales record is even more dazzling. First quarter sales this year reached 469 billion won (470 million USD), more than tripling the transactions recorded in the same period last year. G Market’s astounding growth G Market’s increased market share is one of its most striking features. Having carved off 14.9 percent of the market for itself, G Market has pushed the powerful Auction into second place in terms of market share. G Market’s projections indicate that it will easily surpass a market share of 18 percent in the second quarter. There is also analysis showing that the company has attracted more visitors to its web site than its opponent. According to research done by web site survey company Matrix, G Market attracts some 17.2 million hits every month, outpacing Auction’s 16 million hits per month. G Market President Gu Yeong-bae, talking about his company’s strength, said that it has "achieved record-breaking growth rates of 40 percent per quarter for the last two years. We were the first domestic electronic commerce industry to achieve the success of being listed on the Nasdaq." Behind such achievements is G Market’s unique strategy. They reaped profits through holding major media events, with such music stars as Lee Hyo-ri and Sinhwa. This method differentiated it from Auction, which focused on profiting through commissions placed upon online traders. G Market also benefited from the introduction of the system of "Bargaining," or direct negotiation between buyer and seller, different from the system used by Auction, whereby sales are determined by the order of bids placed by consumers. Now, G Market’s goal is to break into the overseas market, for which it already has plans. G Market will open its English language web site in the second half of this year. "Currently, our company’s global team is in action, weighing the timing of our overseas advance," said company president Gu. "First, we are focusing on Japan." The penetration of overseas markets has special meaning to Gu. Above all else, it is founded on the premise that they have captured the domestic market. It also means the destruction of the impregnable fortress of Auction. Moreover, it hints at a resolve to conquer Auction’s chief stockholder, e-bay. Becoming Auction’s chief stockholder in 2001 (currently owning 99.9 percent), e-bay is a global electronic commerce industry. E-bay’s strength is truly impressive. At the end of last year, there were nearly as many as 150 million registered members. In the fourth quarter of last year, sales and net profits reached 1.32 billion and 279 million USD, respectively. Its fame is renowned, having achieved towering growth rates exceeding 40 percent every quarter since its founding. It is not without reason that G Market’s competition with Auction was described as a "fight between David and Goliath." Auction maintains a stony silence in regards to the theory of G Market’s ascention to first place. It is not because they admit defeat, but rather because they don’t want to squabble over who is number one. However, there are signs of unease within. This is seen in such statements as "G Market keeps on harping on statistics that are advantageous to themselves in order to prove their superiority." The battle of David (G Market) and Goliath (Auction) Auction’s assertion of superiority is not without merit. First, they say that the only field that G Market has surpassed Auction in is that of the number of visitors. One Auction employee asserted that "of all the web site survey companies, only Matrix shows G Market in the lead." Indeed, according to another web site survey company, Korean Click, there were 17.09 million and 17.24 million visits to G Market and Auction, respectively. "The methods of survey employed by Matrix and Korean Click are different and thus there is an aberration," one Auction employee stated. "It would be a miscalculation to interpret Matrix’s numbers as being the absolute truth." They also point out that the volume of trading and sales shows that "Auction is still on top." According to Auction, they outpaced G Market in the total volume of transactions and sales by G Market, which were recorded at 1.08 trillion won and 713 billion won, while the same figures for Auction were reported at 1.7 billion won and 1.58 billion won, respectively. Auction says that "it is completely illogical for G Market to go on and on about this" given those figures. The struggle between G Market and Auction for superiority is indeed heated. G Market has openly declared they are "not satisfied with being number one domestically," and that they "will open up a front against e-bay." One might call it a declaration of war against the world’s leading electronic commerce company. On the other hand, Auction is holding its ground, stating "we are still number one domestically." This article was written by Lee Yun-chan for the weekly magazine Economy21 and translated by Daniel Rakove
