Kakao buys startup Grip, fueling e-commerce push

South Korea's Kakao Corp. has acquired a live streaming e-commerce app Grip Co. to beef up its online shopping business, considered the weakest spot for the country's dominant mobile platform, according to IT industry sources on Wednesday.

Kakao has secured a 48% stake in Grip for about 180 billion won ($153 million) to become its largest shareholder. Its founder and Chief Executive Hanna Kim's ownership shrank to a 17% stake in the startup, ranked as its second-largest shareholder. 

The transaction valued the live shopping platform at around 400 billion won, double its previous value of 200 billion won, at which CEO Kim and other founding members sold part of their shares to unidentified investors last month.

"The sharp increase in the platform's valuation seems to indicate Kakao was desperate to buy Grip," said one of the industry sources.

Established in 2018, Grip introduced South Korea's first live e-commerce platform in 2019, where over 10,000 registered vendors sell products to viewers via live stream. It offers various features to facilitate interactive communication between the sellers and viewers.

The latest acquisition is expected to fuel its expansion into the live commerce market, creating synergy with Kakao Shopping Live, launched last May. Kakao Shopping has been rapidly increasing its customer base, tapping the users of KakaoTalk, the country's largest mobile messaging app.

Earlier this year, Kakao took a majority stake in Zigzag, a domestic online fashion platform targeting teenagers and twentysomethings, after dropping a bid for eBay Korea.

Kakao tops the country's mobile messenger, music streaming, taxi-hailing and webtoon service markets. But it lags far behind in the e-commerce market led by its archrival Naver Corp. In March 2020, Naver added the live commerce feature to its shopping platform Selective. 

Multiple IT and retail companies are jumping into the nascent live e-commerce market. Korean companies making their entry into the online shopping sector include Lotte Department Store; CJ Olive Young, South Korea's largest beauty store chain; Musinsa, the largest of the country's big five fashion apps; and Baemin, the top food delivery app in South Korea.

"Live commerce platforms target millennials and Gen Zers adept at real-time mobile communication," said another IT industry source. "There is plenty of potential for live commerce to become Kakao's next growth driver." 

Write to Min-ki Koo at kook@hankyung.com
Yeonhee Kim edited this article.