SEOUL -- South Korean luxury goods ecommerce platform operator Balaan has seen its first quarterly profit in the fourth quarter of 2023, about eight years after the online luxury product shopping service was launched in 2015. Buoyed by the robust performance in the domestic market, the ecommerce platform operator is poised to expand into the global market.
The three years of the COVID-19 pandemic provided a wide range of opportunities in South Korea's online luxury goods market. Consumers felt less guilty about spending a lot of money when they purchased expensive luxury items through a few clicks in online shopping malls. Online shoppers could also evade the chance of catching the highly infectious disease by not visiting crowded department stores and offline boutique shops.
According to Euromonitor, a global market analyst, South Korea's online luxury goods market stood at 1.5 trillion won ($1.1 billion) in 2022, up about 52 percent from one trillion won in 2015. Three luxury goods ecommerce platform operators -- Balaan, MUST IT, and tren:be -- had a combined market share of about 45 percent in 2022. Balaan saw the fastest growth rate among its rivals, with tis transaction volume skyrocketing from 25.7 billion won in 2019 to 680 billion won in 2022 to record an average annual growth rate of 127 percent between 2019 and 2022.
The success of the so-called "Big Three" luxury goods online shopping mall operators attracted big fish into the pond. Retail giant Shinsegae started a premium luxury goods delivery service through its online shopping mall in 2022, targeting young consumers in their 20s and 30s. Data released by Hana Financial Group's research institute showed that consumers in their 20s and 30s accounted for about 55 percent of the total online sales of luxury goods in 2020.
Balaan said that the company achieved a profit for the first time in 4Q 2023 after the company launched its ecommerce service in 2015. The transaction volume in 2023 exceeded 400 billion won. The company analyzed that its success was attributed to the efforts put in to beef up Ballan's competitiveness as a luxury goods ecommerce platform.
The ecommerce platform operator said that Ballan's artificial intelligence-based product curation system encouraged customers to purchase items from the online store. Other services such as express delivery and guaranteed safe delivery helped the company acquire a solid group of loyal middle-aged customers.
"Achieving such results even in an economic downturn demonstrates the inherent business value of Balaan, which has been focusing on its core competencies in the luxury platform industry. This year, we aim to capture both growth and profitability through global expansion," Balaan's Chief Operating Officer Choi Hyung-jun said in a statement on January 29.
reporter
Park Sae-jin
swatchsjp@ajunews.com
