SEOUL — In a country known for its collective “balli balli,” or “hurry, hurry” mantra, the importance of speed extends to many aspects of life in South Korea. From fast fashion to its subways and express transport systems, fast-food culture to condensed education programs, getting things done quickly and efficiently is often seen as a virtue in Korean society. Unsurprisingly, this notion applies equally to the nation’s fast-growing tech industry.
For 12 years, South Korea has continued to rank first in the world as the country with the fastest Internet speed. The nation is also home to a tech-savvy, highly wired society: In 2016, 92.7 percent of the population was reported to be Internet users.
Because of Internet speed, as well as the high degree of automation and development of speedy delivery services and logistics companies (most online orders can arrive overnight, if not same-day), Korea is home to one of the world’s fastest-growing, most innovative e-commerce markets.
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In 2015, the nation’s e-commerce sector generated $37 billion in online sales, according to local press, and it is projected to keep growing. Home to 51.3 million people — a relatively diminutive number against China’s 1.38 billion or Japan’s 127 million — Korea is Asia’s third-largest e-commerce market, and the seventh largest in the world.
Cafe 24 is one start-up that has benefited from developing in such an environment. The Seoul-based e-commerce firm, which held an initial public offering early last month, can be likened to Canadian e-commerce platform provider Shopify.
Cafe 24 provides free online shopping platforms and services for its online shop clients. Through partnerships with other solutions providers and financial institutions, the firm earns profits from a percentage of the commission their partners make. The company also provides office space, consulting and marketing services for additional fees.
In 2016, the company saw more than 5.3 trillion won, or $4.9 billion, in online transactions. For 2017, it expects operating profits of 7.7 billion won, or $7.2 million, and predicts profits will triple to 26 billion won, or $24.4 million, this year.
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Cafe 24 counts over 1.5 million shops and brands in Korea as clients using its platform; 80 percent of these consist of Korean fashion brands, ranging from small indie labels like Main Booth to major designers such as Munsoo Kwon and streetwear brands like 87mm and Ordinary People.
Chief executive officer and founder Jaesuk Lee said the growing niche for private online shops, or “online malls” as they’re called in South Korea, began more than 18 years ago.
“The late 1990s brought on expanded penetration of Internet infrastructure and high-speed Internet services. This quickly set the foundation for anyone to easily make online purchases and in turn, led to the rise of online shopping mall entrepreneurship.…The owners [of these malls] are Cafe 24’s clients,” he said.
Lee said he observed that while open markets such as eBay and Amazon dominate online shopping markets in many countries, in Korea, “online specialty malls,” or private online shops, still occupy a major segment of the e-commerce market.
“Cafe 24 appeared and began to offer online shopping mall solutions that anybody could use to start their own e-commerce business,” he said. “Such services greatly lowered entrepreneurs’ barriers to entry when diving into the e-commerce market.”
The firm’s free services attracted many small businesses and first-time entrepreneurs. “Within Korea, there is no company with the same business model as [us],” claimed Lee. “We provide online business operations, shipping, payment, language translation, web design, marketing, and customer service through a single admin page.”
The spread of the Korean wave has given rise to the country’s online shopping malls, said Lee, leading to global demand for his clients’ products. “Each specialty mall creates a distinct brand identity through its products, product styling, look books and even multimedia.…For this reason, more and more people are turning to online specialty malls for accurate representation of Korea style and rapid adoption of the latest fashion trends in Korea,” said Lee.
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Korean fashion brands such as Style Nanda, a popular brand in China, use the platform and its translated versions for overseas sales. “We have partnerships with over 80 global companies. Key partners vary by market. For instance, we work with Amazon and Facebook in English-speaking markets; Alibaba’s Tmall and JD.com in the Greater China region; Rakuten and Lazada in Japan,” he said.
The firm hopes to enter the U.S. market someday, and plans to offer its services in Japan by the end of this year. “Cafe 24 will expand its platform to the Japanese market in the second half of this year. Meaning, Japanese sellers will be able to utilize Cafe 24’s platform and solution to start their own online shopping mall and sell to global markets,” Lee said.
“Our ultimate goal is to enable anyone with creativity to do business in the global market,” he added.