Employees say staffing reshuffles at Shinsegae’s e-commerce units are unlikely to reverse the trend

Shinsegae Group President Chung Yong-jin speaks at a new employee training graduation event in Seoul on February 23. Courtesy of Shinsegae Group

Author: Lee Min-hyung

Gmarket CEO Chung Hyung-kwon (left) and SSG.com CEO Choi Hoon-hak / Courtesy of Shinsegae Group

Shinsegae Group is unlikely to make a drastic turnaround following recent top management changes as the company’s e-commerce units still require fundamental reforms to compete with Coupang and Chinese e-commerce rivals, company officials say on Monday.

Last week, the retail tycoon nominated former Alibaba Korea chief Chung Hyung-kwon as the new CEO of Gmarket. Chung is a financial expert who worked at Coupang as a director. In 2023, the group’s money-losing online shopping unit suffered an operating loss of 32.1 billion won ($23.11 million).

The group also replaced the head of SSG.com, its e-commerce subsidiary. As a result of the changes, Choi Hoon-hak, former vice president of the company, became the new head of SSG.com. The company has recorded an accumulated loss of over 450 billion won over the past five years.

Their waning presence can be attributed to intensifying competition in the market amid the staggering price increases of Coupang, AliExpress and Temu. Coupang was the most popular shopping app in Korea, with its monthly active users (MAUs) reaching 8.3 million in May, according to data from market tracker Wiseapp Retail Goods. AliExpress came in second place. Gmarket ranked as the fifth most popular shopping app with 5.67 million MAUs.

Officials at domestic retail companies are pessimistic that Shinsegae’s two online shopping units will be able to make any significant recovery anytime soon thanks to the latest top management shake-up.

“It needs to make sweeping and radical reforms to its business structures to secure core competitiveness in the face of intensifying competition from emerging players,” an official from one retail company said on condition of anonymity. “Staff reshuffles are seen as an expression of the group’s desire to create an atmosphere conducive to change, but it is not enough.”

Another retail industry official also pointed out that Shinsegae is being urged to make bolder decisions to survive in the extremely competitive domestic retail industry.

“Customers discovered fewer attractions when using Shinsegae’s e-commerce platforms compared to Coupang and AliExpress,” the official said. “Coupang achieved rapid growth thanks to ultra-fast delivery, and AliExpress also achieved solid growth thanks to its price competitiveness. However, Gmarket and SSG.com do not have any unique advantages. The two struggling e-commerce partners will not be able to steal customers from their competitors without drastically changing their overall business strategies.”