Korea’s Gmarket poised to post 1st profit since Shinsegae’s takeover

Gmarket, a major e-commerce website based in South Korea, likely turned to profit in the fourth quarter of last year, which would mark the first time for Shinsegae Group, which acquired it from eBay two years ago, to post gains from the online shopping business.

Gmarket is expected to log a profit in the October-December quarter of 2023, swinging from a 13 billion won ($9.9 million) operating loss in the year-earlier period, industry sources said on Tuesday.

Shinsegae Inc., the parent company of the retail giant, acquired eBay Korea, the operator of Gmarket and another online shopping mall Auction, for 3.44 trillion won in June 2021.

Gmarket has since posted losses as it required drastic refurbishment to compete with other e-commerce operators in Korea.

“Shinsegae had to spend heavily on Gmarket to renovate its website and build information technology systems to operate it,” said an industry official.

E-Mart Inc., the retail unit of Shinsegae Group that runs Gmarket, is also required to reflect 1.6 trillion won in intangible asset depreciation costs related to its acquisition of Gmarket over a decade.

Gmarket has been reducing the size of its losses since the fourth quarter of 2022.

In the third quarter of last year, it posted 10.1 billion won in operating losses and given successful year-end sales promotional events over the past two months, the company likely swung to profit in the fourth quarter, sources said.

SELLER-FRIENDLY POLICY

Gmarket was founded in 2000 as a subsidiary of Interpark, a Korean online auction company, and was acquired by eBay in 2009, which subsequently sold it to Shinsegae in 2021.

Industry officials said Gmarket’s successful turnaround has been aided by its proactive policy of attracting sellers to its website.

Gmarket’s Seller Integrated Management System has simplified the procedure for seller registrations.

Before the introduction of the new system early last year, product sales on Gmarket were blocked until approval was granted after membership registration. With the installation of the new system, online sellers can register products for sale as soon as they register.

According to Shinsegae, combined sales of Gmarket and Auction in the first 11 months of 2023 rose 22% from the year-earlier period.

Gmarket cut its logistic costs by 10% in 2023, also contributing to its business turnaround in the fourth quarter, industry officials said.

"In the domestic e-commerce industry, where the influence of Coupang, the dominant player, is growing, Gmarket has effectively used a seller-friendly policy to attract a vast array of goods to its platform,” said one of the industry officials.

Write to Young Chan Song at 0full@hankyung.com

In-Soo Nam edited this article.