Social commerce big bang

Nearly a year has passed since the introduction of social commerce by local operator named Ticket Monster. Triggered by Ticket Monster’s remarkable success, other local operators such as Coupang and WeMakePrice have sprouted and it is estimated that around 800 social commerce sites are in business throughout South Korea. This burgeoning market has even attracted U.S. online commerce giant Groupon recently and Korean social commerce trading volume is anticipated to reach $550 million in 2011.

Aside from this thriving appearance, however, the dark side of the industry is also detected. Including flooding in of customer complaints, problems arising due to rapid-growth of business may have significant influence over the future of social commerce. Therefore, it seems very important to know the possible results the industry may bear within Korean market and recognize the potential risks.

First and foremost, poor customer service is on the table. Most of the players in the market are likely to be at an embryonic stage of growth and tend to focus more on promoting their presence than on quality controls. Therefore, low-value deals are mass produced which in most of the times exceeding supply. Customers feel deceived when they find out voucher they purchased do not match its value promoted on web sites. Customer-related complaints include denied refunds and no unilateral customer service policy as well. This growing of customer discontent may be attributable to the industry’s low entry barrier which requires nominal start-up costs. With massive influx of unqualified players, they tend to overlook the sound relationship with customers and only seek short-term profits. They should know what is best for achieving their long-term survival of the industry as a whole. With respect to this issue, a measure has recently been taken by Fair Trade Commission to address the problems of social commerce. On May 10th, 2011, the governmental body announced that social commerce firms will also be subject to the same consumer protection codes applicable to other e-commerce sellers. This allows customer refund of vouchers within 7 days of purchase, and the use of escrow services for any purchase exceeding roughly $100 and penalties for exaggerated advertising.

Whether the market is growing or not in the long run is an important issue. It is notable that social commerce has expanded its horizon to areas that could not have been a part of traditional e-commerce market. Restaurant business is a good example. Under past circumstance, there were limited ways, such as handing out leaflets, etc., for restaurants to promote themselves. Social commerce came to their rescue by giving new opportunities of marketing. While admitting the benefits of promotion from social commerce, business owners also complain about low-profit margin or sometimes even loss. Since they have to offer a huge price-cut to be entitled to sell vouchers on the social commerce sites, and with commission fees social commerce business charges, significant opportunity costs should be endured to gain desired promotion effect. This fact leaves one question. Is this business model sustainable? It may attract short-term promotion opportunity seekers only and no one may be left in the long-run. Additionally, social commerce is ultimately a commission business. More and more competitors are entering the market and only way to out-stand among groups seems to rest in low price offers by cutting commissions from what they charge currently somewhere between 20-30% in average. Under this dog-eat-dog competition, no one is for sure who is going to smile in the end.

Last but not least, alteration in promotion strategy of social commerce sites is changing the landscape of the business. Originally, the term ‘social commerce’ was used to indicate collaborative purchasing of goods through SNS. However, from early this year, major local social commerce operators have begun relying on traditional mass media, such as TV ads, public transportation ads, rather than promoting their products through SNS. Because of this, some experts question whether operators in the market are truly performing as social commerce business since they no longer use SNS as vital ways in promoting themselves. This results in high burn rate among current market players and keeps new players from walking into the market as entry cost has got way expensive.

It is uncertain whether the ongoing criticism over social commerce is a fundamental issue or part of a trial-and-error process that all start-up businesses go through. And, of course, there is more downside of social commerce industry in South Korea not revealed in this article. But one thing seems to be clear: Korean social commerce industry just took its baby steps and is at a critical point whether it is going to generate permanent return or end as one-time business opportunity.

(This article is developed with Steve J. Min, a publicist at KingsBay Capital.)


Open your eyes to Work-Life Balance

Try to question yourself on the above notion, is your entrepreneurial life well balanced? To a certain extent, you would say it’s rather well-balanced, however, is it truly balanced is the question you should ask afterwards. The idea is if you firmly believe you won’t regret to what you’ve answered, then you can simply ignore this piece; however, for those who have a little bit of guilt should continue to scroll down.

Maintaining a “proper” work-life balance is on the minds of many, especially entrepreneurs. It may take days, weeks, months or even years depending how fast you understand the relationship between them. It could be acknowledged through countless trial-and-error’s, thereby experiencing acrid accounts that inadvertently enable them to take into consideration for future endeavors. For Brad Feld, an MIT alumni who is a managing director at Foundry Group, vents through his blog that it took him almost 15 years, “a failed first marriage,” and his “current wife almost calling it quits” for him to realize that he had to “figure out what work-life balance meant.”

So, what is a “work-life balance” anyway? To simply put, it is a concept that blends the management of business and personal life to attain optimal working hours that can eliminate stress and improve overall life. In other words, you, as an entrepreneur, should manage your time efficiently, plan your activities effectively, prioritize your goals wisely, and know best what fully satisfies you, thereby enjoying work as well as having enough leisure time to cool off the heat. It is probably easier said than be done to many of you.

Starting a new venture is no easy task. You are passionate (and maybe obsessive, too), and have a blueprint of where the startup is heading in the coming years. Over-commitment to the startup at an early developing phase could lead to an exhausting daily life, which could alter physical well-ness or even personality in the long run. Perhaps, accomplishment and recognition from others outweigh or at least put these life factors behind. How long will this last anyways? Imagine yourself being totally burned out to a point where you find yourself sleeping more than half the day lying in bed on the weekends, too tired to get out of home. Is this what you’ve longed for all these years? Enjoying the fact that you’re doing what you love but at the same time feeling physically uncomfortable that you begin to struggle with yourself by attempting not to make it an obstacle to your long journey in venturing out a new business.

We all have a small knack to set up businesses at some point in life. Thanks to technology and its vast use, young and ambitious entrepreneurs are currently diverting from the conventional fresh out of college and landing jobs to build a career through work experience for future endeavors. Hyun-Sung Daniel Shin, Founder and CEO of Ticketmonster in Korea, a fast growing social commerce powerhouse is a prime figure who sets an example to young entrepreneurs in the search for success. In an interview with the JoongAng Daily, he mentioned “I want to enjoy what I do.” After graduating from the Wharton, he quit his job at McKinsey believing that one day his company would become “McKinsey’s client,” which his colleagues even strongly encouraged doing that. Nonetheless, even with all the passion and positive energy exuded to operate their venture, entrepreneurs will eventually find themselves worn out. The question is persistency. Venturing will pause when the physique does not cope with the mind. Hence, finding one’s distinctive way of balancing work and life will help the venturing process seem less exhausting.

(This article was developed with H.G. Byun, a publicist of KingsBay Capital.)