Korean internet giant Naver eyes North America, Europe as it grows its C2C marketplace business

Did you know that Google isn’t the top search engine in South Korea? It’s not even a close second.

Most Koreans actually prefer Naver for various reasons, and they like it so much that the search engine holds about 56% of the market, per Statista. Google is catching up, but it currently only has about a 35% share, and it’ll likely be a while before it can close the gap.

Naver’s other offerings are also received quite well in the country, including its e-commerce platform, messaging, payments, storytelling, digital comics (webtoons), metaverse efforts, a selfie app, games, the cloud and more.

But like any true tech company, Naver was never satisfied with its success at home. The company quickly expanded to Japan, and more widely in Southeast Asia. But instead of leading with its core search engine and e-commerce businesses, it instead opted for different strategies in each new country, such as expanding in Japan with its Line messaging app and increasing its footprint in Southeast Asia with its 3D avatar app, Zepeto, and other offerings.

It’s now expanding its e-commerce business — wildly successful in South Korea with 18% of the market — with a consumer-to-consumer (C2C) marketplace model that it aims to offer in North America, Europe and Asia. Unlike many B2C marketplaces, which usually sell large quantities of a few profitable, popular items, Naver’s e-commerce strategy is focusing on long-tail business, allowing sellers to sell small quantities of hard-to-find items to buyers looking for niche products.

It wants to add a social network feature, which allows sellers to receive comments, likes and users in its e-commerce unit. To that end, the company earlier this month said it would buy Redwood, California-based social commerce marketplace Poshmark for $1.2 billion.

After entering Asia, Naver debated which business would do best in North America, where internet literacy and digital penetration are high, Naver CEO SooYeon Choi told TechCrunch in an exclusive interview.

Naver

Naver CEO SooYeon Choi. Image Credits: Naver

“We didn’t want to compete against global internet search engine giants [or e-commerce] in the U.S., where Google and Amazon already dominate the market,” she said. “So, Naver entered the U.S. market with webtoon and storytelling platforms, then looked at the C2C industry closely in the last two to three years.”

Choi explained that Naver is pursuing the C2C market because that’s what it has done well — connecting consumers and suppliers — and that may be a difficult market for other Big Tech companies to enter.

Like other e-commerce, C2C transactions surged during the COVID-19 pandemic, when millions of people sold unwanted goods and cleared their wardrobes on online platforms during the lockdowns, per a McKinsey report. Apparel and family goods, like toys, were among the most sold secondhand goods in some European countries (such as the U.K, Germany and the Netherlands) during the pandemic. This is not a short trend — it’s projected to continue to accelerate as consumers increasingly grow concerned about sustainability, per the report.

Naver currently operates a range of C2C platforms, including Kream, a Korean sneaker reselling platform spun off from Snow, a Snapchat-like service that Facebook once tried to buy; and Vintage City, a Japanese used clothing C2C app. The company has also invested in French secondhand fashion marketplace Vestiaire Collective and in Spain’s reseller platform Wallapop via Korelya Capital.

Choi said that in the C2C market, the company must keep expanding into other markets to increase the number of listings. She said that the company will aim to grow both via mergers and acquisitions and organic growth. Most of Naver’s businesses have grown organically over the years. The Poshmark deal serves to increase its footprint, too, as the social commerce platform operates in the U.S., Canada, Australia and India.

But for now, the company is focusing on properly integrating Poshmark once the deal closes.

“Our next goal is focusing on post-merger integration (PMI) instead of acquiring additional C2C platforms. We don’t rule out acquiring more C2C platforms if it suits our strategy, but our priority, at this point, is increasing each of the C2C platforms’ market share in individual countries [in the U.S., Europe and Asia].”