Naver Bets on Unlimited Free Shipping to Combat 'Dol-pang' Trend

In a bold move to solidify its position in the fiercely competitive e-commerce market, Naver is set to launch an "unlimited free shipping" service for its membership subscribers later this year. This strategic initiative comes as the company observes a trend of customers, dubbed 'tal-pang' (those who left Coupang), beginning to 'dol-pang' (return to Coupang) following a major data breach at its rival late last year. Naver's aim is clear: to bolster its delivery capabilities and prevent further customer attrition.

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The top priority of our commerce strategy this year is to strengthen delivery competitiveness. In the second half of the year, we plan to introduce unlimited free shipping service linked to our membership.

The 'unlimited free shipping' offer, bundled with Naver Plus Membership (priced at 4,900 won per month), is designed to be more attractive than Coupang's 'Wow Membership' (7,890 won per month), which also offers free shipping. While Naver acknowledges it cannot match Coupang's delivery speed in the short term, it believes a lower price point for a similar benefit will be a significant draw. This strategy is particularly crucial given that data suggests a slowdown in the 'tal-pang' movement, with Coupang's transaction volume recovering to pre-breach levels in March.

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Naver likely doesn't want to miss the opportunity for e-commerce sales growth it gained due to Coupang's troubles. While profitability may be somewhat damaged in the short term, if it absorbs 'tal-pang' users, it can expand its long-term revenue base.

Industry observers view Naver's move as a proactive measure to capture and retain the e-commerce customers it gained during Coupang's troubles. While the increased shipping costs might impact short-term profitability, the long-term benefits of securing a larger customer base and expanding its revenue streams are considered substantial. Furthermore, Naver is actively exploring direct investment in its logistics infrastructure, signaling a commitment to building a more robust and efficient delivery network. This includes expanding its 'N delivery' service, which guarantees delivery times for essential goods, and introducing a direct contract model with sellers for fulfillment services. From a South Korean perspective, this battle for e-commerce dominance is not just about market share; it's about shaping the future of online retail and consumer convenience in a rapidly evolving digital landscape.

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We are actively considering a direct investment model in logistics.