Naver, Kurly tie up to counter e-commerce giant Coupang

South Korea’s online giant Naver Corp. and dawn grocery platform service provider Kurly Inc. have joined forces for a potential stake acquisition to take on e-commerce behemoth Coupang Inc.

Naver said on Friday that it signed a strategic partnership with Kurly, the operator of grocery delivery platform Market Kurly, to cooperate in the overall e-commerce business. Kurly plans to sell its products on Naver’s artificial intelligence (AI) shopping platform – the Naver Plus Store – through the deal.

The alliance is expected to boost Naver's position in the fresh food segment, where it is relatively weak, while allowing Kurly to attract new customers.

AI and fresh foods are Coupang’s weaknesses, industry sources said.

Naver is doing its utmost to improve its online shopping business, which accounts for about 27% of its total sales, by introducing its own AI model to the sector and strengthening delivery competitiveness.

TO EXPAND WAR FRONT AGAINST COUPANG

Naver’s e-commerce transaction value was estimated at 50 trillion won ($35.1 billion) last year, lagging Coupang’s 55 trillion won, according to the sources.

Naver is considering taking over a stake in Kurly to beat the New York Stock Exchange-listed Coupang, investment banking industry sources said earlier this month.

“Naver has been expanding its war front against Coupang by exchanging stakes with Shinsegae and CJ,” said an industry source.

In 2021, Naver signed a 250 billion won share swap deal with South Korea’s retail giant Shinsegae Group. The online platform also inked a 600 billion deal to exchange shares with food and logistics conglomerate CJ Group in 2020.

TO STRENGTHEN E-COMMERCE BUSINESS

Naver is focusing on strengthening its e-commerce business as its search and advertising divisions slow.

Its search and advertising business sales grew 9.9% to 3.9 trillion won last year, while e-commerce sales rose 14.8% to 2.9 trillion won.

The company launched the Naver Plus Store last month to accelerate its e-commerce business and reduce its dependence on the slowing search and advertising business.

The app, the first software program separated from Naver’s portal app in four years, is powered by its in-house large language model (LLM) HyperCLOVA X.

The Naver Plus Store provides customers with optimized information for shopping to help users find the exact products they need.

The Naver Plus Store topped last month's new shopping app chart as its AI feature attracted about 3 million users.

South Korean e-commerce operators such as Coupang have been reluctant to introduce AI in shopping as they were fearful that the technology could suggest the wrong products, industry sources said.

Naver plans to resolve the issue through personalized recommendation algorithms based on HyperCLOVA X.

Write to Jeong-Hoon An at ajh6321@hankyung.com
 
Jongwoo Cheon edited this article.