●Strengthening logistics capabilities through subsidiary fastbox
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◆Kim Dongmin (Kim): Hello. Logibridge that creates distribution logistics mobility content. Hello, reporter Park Je-jun.
◇Jejun Park (Park): Hello, nice to meet you.
◆Kim: Reporter Park Je-jun. Harim, Daiso Mall, SM Entertainment, and Stylenanda all have something in common. Can you guess?
◇Park: Well. There seems to be no connection, but I don't know what they have in common.
◆Kim: Yes. It is that all four companies operate online shopping malls using the'Cafe 24' e-commerce platform to conduct online business.
Today, we prepared a time to analyze two companies, the e-commerce platform Cafe 24 and Korea Center, which had a large amount of online transactions, comparable to that of eBay Korea, Coupang, and Naver.
But in fact, the two companies seem alike and are very different.
◇Park: What is similar and what is different?
◆Kim: Looking at the proportion of business sales between the four companies, business areas show little differences over the years.
Cafe 24 has an overwhelmingly high proportion of sales in the service fee sector in both 2012 and 2019, For the Korea Center, the proportion of service sales (service provision) decreased from 99.5% in 2012 to 39.67% in 2019, and the proportion of product sales increased to 57.79%.
◇Park: So Cafe 24 has been focusing on service fee-based business since 2012, and the Korea Center has diversified its business in a new way, right?
◆Kim: Looking at the current situation, the big trend seems to be that. As you can see in the table now, the online shopping transaction amount of Cafe 24 has increased sharply every year from 6.7 trillion won in 2917 to 9.2 trillion won in 2019.
Although the transaction amount reaches 10 trillion won, it is a relatively small company compared to eBay Korea and Coupang.
Moreover, the number of shopping malls using Cafe24 reaches 1.78 million and the number of members is close to 5.8 million,
so it has a considerable influence in the domestic e-commerce market. Based on this know-how, we are expanding our business to a'global e-commerce platform' that helps local companies export online by establishing corporations in Vietnam, Japan, and the Philippines while expanding shopping malls that have generated sales in Korea.
◇Park: Cafe24 I knew it as the first company listed under Tesla requirements in February 2018, but it had a higher transaction value than expected and had more customers.
By the way, if the transaction amount reaches 9 trillion won, the sales will be significant.
◆Kim: Sales in the first half of this year amounted to 1142 billion won, and compared with the same period last year, it increased by 9.28%.
◇Park: Well, but the transaction amount is around 9 trillion won, but you think the sales amount is a little lower than you think?
◆Kim: As you saw earlier, the'service fee' is overwhelmingly high in the proportion of Cafe 24 sales. If you create a shopping mall through Cafe 24, all costs are free.
So, it provides an opportunity for anyone to easily create a shopping mall with very little capital. Instead, we provide a variety of additional services for a fee, such as advertising agency, marketing agency, logistics agency, purchase agency, and production agency related to e-commerce transactions, and take profits as revenue for each product sold.
So Cafe 24 has a structure that makes more profits the more customers sell products and increase sales.
As of the first half of this year, the proportion of sales by business was 67.1% for e-commerce (shopping malls), 13.6% for infrastructure (hosting), and 13.4% for advertisements.
◇Park: Then, by simple calculation, if the transaction amount of Cafe 24 in the first half of this year is 5.2 trillion won, and the sales amount is 1142 billion won, the sales compared to the transaction amount by simple calculation is 2.19%. So, how much commission does Cafe24 take every time a product is actually sold?
◆Kim: According to the Yes Small Business Corporation, when a customer orders a product with a credit card in an online shopping mall, a 3.5% card fee is incurred, of which 2.2% for credit card companies, 0.9% for hosting companies such as Cafe24, and KG PG companies like INICIS will take a 0.4% commission.
For example, assuming that you purchased a TV that costs 1 million won with a credit card, a card fee of 35,000 won will be incurred.
Here, the credit card company takes 22,000 won of profit, the hosting company like Cafe 24 distributes 9000 won, and PG distributes the profit of 4000 won.
◇Park: Then, is the fee rate the same even if you run a shopping mall that sells overseas in Korea?
◆Kim: Yes, this is the important point. In fact, Cafe 24 is creating a wider range of value-added services on the global e-commerce platform, beyond simple commission brokerage.
In order to sell goods to overseas consumers in Korea, language translation is also required, and a settlement system suitable for the commerce environment of each country must be established.
The logistics process of sending goods and receiving returns is also more challenging. You also need to understand advertising or marketing tools for each country.
In this process, Cafe 24 creates a number of added values. For example, in logistics, when sending goods from domestic to overseas, sending 10 pieces and sending 100 pieces have different shipping costs.
Cafe 24 has a logistics subsidiary,'Fastbox', which collects the goods of shopping mall owners who send goods from home to abroad, and achieves economies of scale and reduces logistics costs accordingly.
From the point of view of the shopping mall owner, the price competitiveness is achieved by lowering the logistics cost, and as a result, there are many advantages when competing with many overseas companies.
In addition, by entrusting the complex logistics process to Cafe 24, you can focus on sales and marketing, the essence of the business.
As such, Cafe 24 has several subsidiaries related to e-commerce transactions, and the fee rate is inevitably different from each other depending on how customers cooperate with Cafe 24.
◇Park: Oh, so companies like Harim, SM Entertainment, and Daiso that you mentioned earlier will all have different conditions depending on the B2B contract?
◆Kim: That's right. Taking a step further, Cafe24 is evolving into a platform that can more efficiently operate the entire supply chain, including product sourcing and manufacturing.
It seems to be reborn as a global business integration solution company that can manage and efficiently operate the entire supply chain of SCM, that is, beyond just an e-commerce platform.
◇Park: Yes, it is. However, today our theme seems to be similar to other Cafe 24 and Korea Center, but the business structure of Cafe 24 is now understandable. I want to know what the structure of the Korea Center is.
◆Kim: Yes, the Korea Center will look at the details in the next part 2 to see how we are implementing different strategies from Cafe 24. Thank you.