Online retail giant EBay may sell its South Korean operations, as it faces competition in the ecommerce industry in the U.S. domestic market and internationally.
“EBay has initiated a process to explore, review and evaluate a range of strategic alternatives for its Korea business,” the California-based company said in a statement issued on January 19. “The company is considering options that would maximize value for its shareholders and create future growth opportunities for the business.”
The South Korean unit has long been named as a potential candidate for a sale. Last year Lotte Group reportedly considered buying the business, but pulled out due to a high price tag. EBay reportedly wants more than 5 trillion won $4.5 billion) now.
EBay Korea, which operates Gmarket and Auction, has recorded net profits for the last 15 years despite fierce competition in the ecommerce industry. Users of Smile Club, its paid service that offers discount benefits and customized shopping experiences, increased to more than 2 million in July 2020 from 30,000 in January 2017. It also launched its own online payment system, Smile Pay, in 2014.
According to the latest company report, eBay Korea recorded revenue of 1.09 trillion won ($993.5 million) and an operating income of 61.5 billion won in 2019, up 12% and 27% respectively year-on-year. Its earnings are expected to have further improved in 2020 thanks to a jump in online purchases caused by the Covid-19 pandemic.
EBay Korea has about a 14% share of the domestic ecommerce market.
The review of the strategic options for eBay Korea coincides with the arrival of Jeon Hang-il as chief executive officer earlier this month. Jeon previously led eBay Japan.
An ecommerce expert, Jeon worked at South Korean firms Lotte Apartment Store, LG International Corp and Samsung C&T Corporation before joining eBay in 2003. (Reporting by Seon-ho Kim)