eBay Confirms Interest to Sell Korean Unit as Growth Continues to Lag Behind Rivals
Reading Time: 3 minutes eBay has officially kicked off the sale of its Korean subsidiary eBay Korea LLC which the company hopes will fetch around five trillion won (about $4.6 billion), The Korean Economic Daily (KED) reports today. The Korean eBay unit operates the Gmarket and Auction ecommerce sites in South Korea.
This is the second time inside of a year that Korean media claims eBay is selling the Korean subsidiary. Last year in March, the same news outlet reported eBay had put the local company up for sale with The Korea Times reporting that it found a possible buyer. Apparently, a deal never materialized.
Now there appears to be a renewed focus to find a buyer for the still profitable Korean subsidiary as other rivals in the market have been taking a big chunk out of eBay Korea’s market share.
At one time, eBay’s Korean unit boasted about 70 percent of the market share in Korea. But new rivals, including Coupang, TMON, WeMakePrice, and Naver’s shopping platform Smart Store have been catching up and investing heavily into logistics, giving the newcomers an edge over eBay Korea.
The average growth of online commerce in Korea has been around 20 percent annually, which eBay Korea falls short of, according to the KED. Especially, last year during the COVID pandemic many Korean online rivals grew their sales significantly, while eBay Korea’s sales stayed mostly flat, the news outlet reports.
But the key value of eBay’s Korea unit is that the company is profitable, while its rivals are still investing in their online operations and incurring losses. Of course, that is a strategy that has worked well for Amazon and one that Walmart is following in the US with eBay falling to third place in US online commerce.
Third Big Sale of Non-Core Marketplace eBay Unit
The potential sale of the Korean unit should not come as a surprise. Since 2019 the company has been urged by activist investment groups to divest itself from non-core marketplace units.
In late 2019, eBay sold StubHub to European ticket marketplace Viagogo and in the summer of 2020, the company sold its eBay Classifieds Group to Norway’s Adevinta. Both sales drew the attention of the UK’s CMA antitrust watchdog. While the CMA allowed the StubHub sale to close and placed the anti-competition issues on the new ownership, the eBay Classifieds Group sale appears to be on hold until the CMA finalizes its investigation.
The Korean Economic Daily reports that several private equity firms may be interested in the Korean eBay unit, including:
- MBK Partners, which acquired grocery chain Homeplus.
- Affinity Equity Partners, which has a stake in Shinsegae’s online shopping platform.
- KKR & Co. and Anchor Equity Partners’ which are invested in TMON.
Additionally, KED suggests that “Hyundai Department Store is also a potential candidate given that it was active in the M&A market last year” and that other Private Equity firms could be looking to form a partnership with local retailers to purchase eBay Korea.
KED said the company hired Goldman Sachs and Morgan Stanley to carry out pre-marketing activities to find interested parties.
eBay Confirms Interest to Sell South Korean Unit
On January 19, eBay confirmed in an official statement they are looking to sell the South Korean unit.
“eBay has initiated a process to explore, review, and evaluate a range of strategic alternatives for its Korea business. The company is considering options that would maximize value for its shareholders and create future growth opportunities for the business.”
The company said it would provide no further updates or information on this strategic review unless and until the Board has approved a course of action requiring disclosure.
Note: The story was originally published January 5, 2021. It was updated January 20 to reflect confirmation by eBay.
Resources:
If you liked this article and would like to engage with other small business entrepreneurs selling on marketplaces, join our . You can also find us on , , , and or sign up for our newsletter below.
SIGN UP. BE INSPIRED. GROW YOUR BUSINESS.
We do not sell your information. You can unsubscribe at any time.
Richard Meldner
Richard is co-founder of eSeller365. He has over 17 years of experience on eBay which includes tens of thousands of sales to buyers in over 100 countries and even has experience with eBay’s VeRO program enforcing intellectual property rights for a former employer. And for about two years Richard sold products on Amazon using Amazon FBA in the US.
To “relax” from the daily business grind, for a few weekends a year, he also works for IMSA as a professional race official.