Consumer-to-consumer trading platforms in South Korea are broadening their business lines to escape structural losses and improve profitability.
KREAM, a platform for trading limited-edition goods, said on the 3rd that it is launching a food and beverage collaboration project called "KREAM on the Table." The company plans to extend its brand experience beyond fashion and culture into dining spaces and widen its offline presence. It said it will continue partnering with a range of brands following this first project.
The project is part of KREAM's push to become a lifestyle platform. Earlier this year the company launched KREAM Gold, a service supporting trading in gold bars and coins, and Acryl, its own fashion private-label brand. On the 30th of last month, NAVER, the parent of KREAM's former parent Snow, disclosed that it had taken part in a 130 billion won ($92 million) rights offering. The funds are intended to build authentication capabilities needed when launching new categories and to roll out private-label products.
Profitability lies behind KREAM's aggressive expansion. The company posted revenue of 202.5 billion won and an operating loss of 8.1 billion won last year. It has recorded losses for six consecutive years since being spun off from parent company Snow in 2021. The latest expansion is seen as another attempt to break through the limits on its earnings.
The difficulty C2C platforms face in generating profit stems from their business model. Such platforms typically earn money by collecting fees for brokering transactions. Unlike conventional retailers, which can set prices on goods they have purchased and design their own margins, platforms have no control over pricing. That leaves little room to expand margins.
Other C2C platforms are also working to improve profitability. Bunjang posted revenue of 58.2 billion won and an operating loss of 19.9 billion won last year. It is seeking to improve earnings through services such as Bunjang Global, aimed at overseas users. Transactions on Bunjang Global rose 56% in the first half of this year from a year earlier.
Joonggonara and Karrot are cited as cases that turned profitable relatively early. Joonggonara posted an operating profit in the first half of this year, its first profit on a half-year basis. Karrot turned profitable in 2023 on the growth of its advertising business and has maintained that trend since.
