Naver, South Korea's most famous Web searching portal site, flatly denied rumors that it would make inroads into the online shopping mall market. It officially dismissed market speculation that the launch of its online payment system dubbed "Checkout" on Dec 7 is a revelation of Naver's ambition to enter the online retail market.
"It has been rumored that Naver is trying to dabble in the online distribution business. The online retail market's cutthroat competition, however, only entails huge marketing expenses. Besides, the market's revenue structure isn't good enough. Why should we bother to enter that market", refuted Official with the Business Platform Unit spun off by NHN Corporation- South Korea's leading Internet company operating Naver.
He went on to say, "Naver has successfully raked in revenues, based on its traditional advertisement model, so we have no reason whatsoever to jump into the online retail market. If we enter the market, we have to compete against our big sponsors such as Auction (www.auction.co.kr) and Gmarket (www.gmarket.co.kr). We are unwilling to go out on a limb and risk losing them."
He also talked about market expectations that Naver would soon fold up its Checkout business which has shown a lackluster performance in luring in online shopping malls. "Our Checkout service is designed to assist small- and mid-sized online malls in making their advertising more effective; its goal isn't to attract big online shopping malls. Therefore, even though its growth pace isn't as impressive as one might expect, it has been working out as planned."
This year, 120 online shopping malls signed up for Naver's Checkout service. In the first half of next year, S. Korea's biggest internet portal will revamp its Checkout service to make it more user-friendly. Under the current Checkout system, the operators of Internet shopping malls linked to Checkout have the inconvenience of checking information on purchases and deliveries on administrators' pages offered by Naver when transactions occur.
Naver is planning on providing services to instantly forward the data to online shopping malls. Since only online malls using Inicis, an online payment service provider, can allow consumers make their electronic payments on Naver's Knowledge Shopping (its price comparison site), Naver is also set to sign partnerships with two or three more PG (payment gateway) providers.
Official added, "We will make efforts to make shopping information more visible on Knowledge Shopping. It is meaningless for Internet portal operators to draw boundaries between their business realms. More focus should be placed on what sort of value consumers can have in each realm."
