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| Must'it's mobile shopping platform shows "hot deal" online promotions for luxury goods on May 31, 2021. Courtesy of Must'it |
By Kim Jae-heun
The top three luxury shopping platforms ― Must'it, Balaan and Trenbe ― showed record-high sales last year thanks to the COVID-19 pandemic, which has stimulated people to spend more on products of designer labels. However, their operating losses also increased by big portions due to hiring star models and advertising on their online platforms, an industry official said, Monday.
According to the Financial Supervisory Service's (FSS) electric public disclosure system, DART, on April 6, Balaan's 2021 revenue reached 52.1 billion won ($40.97 million), up 114.5 percent from 24.3 billion won in revenue in 2020. However, its operating loss also soared by 192 percent to record 18.5 billion won from 6.35 billion won in the same period.
Trenbe's sales last year also increased by 27.2 percent to show 21.7 billion won, up from 17.1 billion won year-on-year. Meanwhile, its operating loss skyrocketed to 33 billion won in 2021, up 224 percent from 10.1 billion won in 2020.
Must'it was in a similar boat. Its sales increased by 66 percent from 12 billion won in 2020 to 19.9 billion won in 2021, but it recorded its very first operating loss of 10 billion won last year.
Industry officials said that the online luxury shopping malls' operating losses increased due to the fierce competition between the firms and their big spending on marketing. Balaan, Trenbe and Must'it hired top actors Kim Hye-soo, Kim Hee-ae and Ju Ji-hoon as their advertising models, respectively.
"The competition between online luxury platforms became fiercer than ever while the companies' profit model worsened. Here, there are newcomers that are making the market more saturated," a luxury shopping platform official said.
Another luxury shopping mall official said that the market is repeating the same patterns that local e-commerce firms have been experiencing for the last few years.
"It's like a game of chicken. Only the No. 1 player will survive in the scene and we have to compete like Coupang is doing now with Naver and Shinsegae," the luxury shopping platform official said.
