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eBay Korea up for sale amid tougher competition

Industry 14:25 January 20, 2021

SEOUL, Jan. 20 (Yonhap) -- U.S. e-commerce operator eBay Inc. said Wednesday it is looking for a potential buyer for its South Korean unit, which could change the landscape of the local online commerce market if a big deal is made.

EBay is the No. 2 e-commerce player in the U.S. with about 11 percent of its revenue coming from South Korea, but its market share falls far behind formidable leader Amazon.

Its Korean unit, eBay Korea, is South Korea's largest open marketplace operator with major online shopping malls, including Gmarket, Auction and G9.

"EBay has initiated a process to explore, review and evaluate a range of strategic alternatives for its Korea business," the California-based online giant said in a statement.

"The company is considering options that would maximize value for its shareholders and create future growth opportunities for the business."

This file image shows eBay Korea's logo. (Yonhap)

According to media reports, eBay floated the idea of selling the Korean unit at around 5 trillion won (US$4.5 billion) in its previous M&A attempts, but it fell short of starting an official process.

The proposed amount is far higher than the market values of local retail giants. Lotte Shopping Co. is valued at 3.2 trillion won and Shinsegae Inc. at 2.4 trillion won. Both companies have sought ways to expand online channels to offset their sluggish store sales.

Market watchers say the potential sale of eBay Korea is expected to bring a seismic change to the local online market, but the proposed corporate value will be key to proceeding with the deal.

"Considering eBay Korea's falling market share in the last three years and the rise of Coupang and portal sites' (online shopping malls), the actual sales price is likely to go below 5 trillion won," Kim Myung-joo, an analyst at MiraeAsset Daewoo Securities, said. "Depending on who takes over eBay Korea, competition could intensify in the short term."

In contrast to e-commerce leader Coupang that has grown fast but never turned to profits, eBay Korea has posted operating profits for 15 consecutive years since 2005 but posted slower growth than its emerging rivals.

EBay Korea's open marketplace platform focuses on matching multiple buyers and sellers of goods and services with fees, while Coupang aggressively invested in its own logistics and couriers for its direct purchase system to attract more customers.

In the face of intensifying competition in the e-commerce market, eBay Korea's operating profit rate fell from 6.5 percent in 2017 to 5.7 percent in 2019, according to industry data.

ejkim@yna.co.kr
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