Rocket Wow, Shinsegae Universe Club and Curly Members launched one after another.
Song Ha-seung (30), an office worker, is a member of Coupang’s subscription-type membership service ‘Rocket Wow’. At first, he was repulsed by the fact that he had to pay a monthly membership fee, but after using it, he was satisfied with the additional service. Above all, what moved Song’s heart was Coupang’s OTT (online video service) Coupang Play. Mr. Song especially likes soccer because he can enjoy the matches of the Korean national soccer team through Coupang Play. Coupang Play has won exclusive broadcasting rights for Paris Saint-Germain’s friendly match in Korea, to which Lee Kang-in belongs. Mr. Song said, “Considering that the monthly membership fee is 4,990 won, the cost-effectiveness is quite good.”
Coupang, the leader in subscription-type membershipIn the domestic distribution industry, competition for subscription-type memberships such as Coupang, Shinsegae, and Market Kurly is heating up. While Coupang, the industry leader, took the lead with Rocket Wow, Shinsegae Group also launched Shinsegae Universe Club on June 8 to catch up. Market Curly also launched Curly Members, a subscription-type membership, on August 1. Each service is operated by paying membership fees on a monthly or yearly basis to use additional services or receive discount benefits (see table).
The leader in subscription-type membership service is definitely Coupang. According to the ‘Online Shopping Trend Report 2023’ surveyed by 2,500 adult men and women across the country for five days from June 1 by the consumer data platform Open Survey, the subscription-type membership that respondents showed the highest satisfaction with was Coupang Rocket Wow. Consumer response is also reflected in numbers. The number of Coupang Rocket Wow membership members nearly doubled from 6 million in 2020 to 11 million last year. In June of last year, the membership fee was drastically increased from 2,900 won to 4,990 won, raising concerns about member withdrawal, but the number of users continued to increase.
As the number of loyal customers increased, the landscape of the e-commerce market also changed. According to an earnings report submitted to the U.S. Securities and Exchange Commission ( SEC ), Coupang’s second-quarter sales increased by 21% year-on-year to KRW 7.6749 trillion. It is the largest ever on a quarterly basis and the largest among domestic distribution companies. With this, Coupang beat E-Mart for two consecutive quarters.
Coupang’s active customers (customers who purchased Coupang’s products at least once within a quarter) increased by 900,000 and 700,000 in the first and second quarters, respectively, and are approaching 20 million. Coupang’s active customers are expected to increase as subscription-type membership services become more active. Kim Beom-seok, chairman of Coupang’s board of directors, said in a 2Q performance conference call, “The majority of Rocket Wow members do not use Coupang Eats, so there is great potential for growth.”
“Loyal customers are important as the population is declining”Shinsegae Group’s competitive subscription-type service ‘Shinsegae Universe Club’ in June is also interpreted as a sense of crisis. Shinsegae Universe Club is a method of adding offline affiliates such as E-Mart, Shinsegae Department Store, Starbucks, and Shinsegae Duty Free to the SSG.com and G-Market integrated membership ‘Smile Club’ operated in the past . The idea is to enable customers to benefit from online and offline through membership services. You have to pay an annual fee of 30,000 won, but you get substantial cash benefits. If you sign up for the Shinsegae Universe Club through E-Mart, you receive 30,000 e-money points that can be used like cash. According to Shinsegae, members used an average of three affiliates for 50 days after launching the service. The unit price of members was 67% higher than that of non-members.
Subscription membership is a proven business model overseas. A representative example is Amazon Prime, a membership of global retailer Amazon. Amazon introduced the world’s first paid membership service, Amazon Prime, in 2005. If you pay an annual fee of $ 139 (about 186,000 won), you will receive free shipping and OTT Amazon Prime Video. For membership subscribers, ‘Amazon Prime Day’ is held and large-scale discount events are held. There are 200 million Amazon Prime subscribers. Subscription membership helped Amazon beat Walmart, the undisputed No. 1 company in the U.S. distribution industry.
As South Korea is facing population problems, some diagnose that the importance of subscription-type membership is great. As there is a limit to increasing the number of customers, a strategy to increase the ‘purchase amount per person’ is needed. Seo Yong-gu, a professor of business administration at Sookmyung Women’s University, said, “As the Korean population is declining in earnest in the future, the distribution industry is also setting goals to increase스포츠토토 loyal customers.” Professor Seo emphasized, “In order to increase the number of loyal customers, it is necessary to provide unconventional incentives or increase the convenience of use through applications.”
OTT is cited as a key incentive factor for subscription-type membership in Korea . Coupang is evaluated for successfully attracting customers through its own OTT Coupang Play. According to the data analysis platform Mobile Index, Coupang Play’s monthly active users ( MAU ) in July exceeded 5.19 million. It is third after Netflix (11.74 million) and Teabing (5.22 million). Coupang Play started its original service in earnest by signing an exclusive service contract with A Story for ‘ SNL Korea’. In particular, the expansion of the content area to the sports sector also led to the securing of loyal customers. A typical example is the method of acquiring exclusive rights to broadcast major games. According to Open Survey, the proportion of members who subscribe to Coupang Play for sports broadcasting reached 19%. Shinsegae Group is also responding to Coupang by collaborating with
three terrestrial broadcasters and SK Square. It is a service that allows membership subscribers to purchase Wave tickets at a low price. If you sign up through SSG.com , you can get up to 50% discount on the 5-month Wave Standard subscription (54,500 won). As 30,000 points of SSG money are provided during the membership sign-up process, you can use Wave at virtually no extra cost.
Bleeding competition intensifiesThere is also a diagnosis that competition among e-commerce companies for subscription-type membership is intensifying. A representative phenomenon is that the subscription fee is cheaper for latecomers. The annual membership fee for Shinsegae Universe Club is 30,000 won, which is half of that of Coupang (59,880 won). Curly Members’ monthly fee is 1,900 won, which is the cheapest among major subscription-type memberships. In particular, Shinsegae Universe Club and Curly Members compensate for subscription fees with points, so you can use them virtually free of charge. It’s like giving a free discount.
As several e-commerce companies compete to recruit subscribers, more and more people are weighing the benefits. In an internet community, it is not difficult to see an article saying “The Curly Members subscription fee is 1,900 won per month, so there is no burden, but I am thinking about postponing the subscription because I think there will be an additional event in the future.” An official from the distribution industry said, “It seems that some companies are implementing rather excessive incentive strategies to recruit loyal customers.”