Gmarket, the e-commerce unit of South Korea’s Shinsegae Group, has joined forces with China’s Alibaba to seek a turnaround amid persistent financial struggles. Shinsegae announced Dec. 26 that it will establish a joint venture with Alibaba International, with both companies holding equal stakes. The new entity, set to launch in 2025, will absorb Gmarket as a subsidiary, alongside AliExpress Korea.
Founded in 2000, Gmarket was once South Korea’s top e-commerce platform but has struggled to keep pace with competitors such as Coupang, often referred to as the “Amazon of Korea.” Coupang’s aggressive mobile-first strategy and rapid delivery services have reshaped the country’s online retail landscape. Shinsegae acquired an 80.01% stake in Gmarket’s operator, eBay Korea, for 3.44 trillion won ($2.6 billion) in 2021, marking the largest acquisition in its history. The company had high hopes for the purchase, calling it “a starting point for Shinsegae’s transformation into a digital group.”
However, Gmarket has posted consecutive losses since the acquisition. After recording a modest profit of 4.3 billion won in 2021, the company reported losses of 65.4 billion won in 2022 and 32.1 billion won last year. Through the third quarter of this year, Gmarket’s losses stood at 34.1 billion won.
“When Shinsegae acquired Gmarket, Coupang was already expanding aggressively,” a retail industry insider said. “While the e-commerce sector was shifting toward mobile platforms, Gmarket struggled to adapt.”
Shinsegae’s financial burden from the eBay Korea deal was significant. The company reportedly funded the acquisition through asset sales, including its Emart Gayang store and Emart Vietnam. Additional funds were raised through property sales and secured loans. At the time, there was speculation that Shinsegae had overpaid for the acquisition, but the company was determined to strengthen its position in online retail.
The acquisition has had ripple effects across the Shinsegae Group. Emart, its flagship retail brand, reported its first loss in 12 years last year as e-commerce competitors expanded into fresh food, a traditional strength of large-format stores. Gmarket, rather than bolstering Shinsegae’s online presence, has been seen as a drag on the group’s overall performance.
In March, Seo Jung-yeon, an analyst at Shinyoung Securities, noted that Shinsegae appeared torn between online and offline strategies. “Shinsegae’s acquisition of Gmarket and Auction to compete with Coupang was overly ambitious,” Seo said in a report. “The failure to integrate logistics has resulted in significant impairment losses.”
