NAVER D-Commerce Report 2020
NAVER D-Commerce Report 2020
NAVER D-Commerce Report is published annually to provide insights into online entrepreneurs and digital business ecosystem through data, and to explore opportunities for improving seller welfare. This year, we looked into how NAVER technology platform and data-led support programs empowered SMEs and contributed economic value.
Part 1. NAVER, a technology platform for SME digital transformation and overcoming the COVID-19 crisis
SMEs grew 90% year-on-year with NAVER SmartStore
NAVER SmartStore is an e-commerce retail platform that helps businesses register and sell products online with ease. NAVER supports SmartStore sellers by providing free education, consulting, and financing services through the D-Commerce Program.
In the first half of 2020, gross merchandise volume(GMV) of SmartStore grew by 60% year-on-year. During the same period, individuals and small businesses recorded an average growth rate of more than 90%, far exceeding the overall growth rate
48% of NAVER SmartStore sellers generating revenue are early stage entrepreneurs with less than one year of experience
The number of sellers generating sales via SmartStore is increasing steadily. Between 2014 and 2019, the number grew at a compound annual growth rate (CAGR) of 53%, and the total number in 2019 was 8.5 times greater than that of 2014.
Most notably, sellers within one year of registration accounted for 48% of all sellers that generated sales as of the first half of 2020, indicating that SmartStore is playing a key role in helping new sellers launch their online businesses and achieve early sales goals.
NAVER SmartStore enabled meaningful digital growth in non-metropolitan regions
During the first half of 2020, SmartStore recorded a year-on-year growth rate of 68.8% nationwide. For the same period, businesses located outside the Seoul metropolitan area recorded higher growth rates, with SmartStores based in Sejong Special Self-Governing City growing 128% and those based in Gyeongsangnam-do growing at 102%.
Through SmartStore, more SMEs in non-metropolitan regions are expected to overcome the constraints of physical distance and grow by reaching more users online.
Continuous technology upgrades to help SMEs overcome the COVID-19 crisis
NAVER helps SMEs connect with users online meaningfully through various sales tools and platforms such as ‘Local Market Shopping‘, ‘Shopping LIVE’, ‘Smart Order, In-store Payment’. NAVER also actively supports COVID-19 recovery efforts through active partnership with public agencies and online seller education such as ‘Public Private Partnership(PPP)’ and ‘Partner Square TV‘. As such, NAVER is enabling on-line and off-line SMEs to achieve digital transformation and develop new sales channels despite the COVID-19 crisis.
Professor Yoo Byungjoon of Seoul National University Business School, who led the D-Commerce Report project, commented, “In response to the global pandemic caused by COVID-19, SMEs are staying resilient by utilizing technology platforms and tools. NAVER was able to contribute to SME digital transformation in a meaningful way at a critical time through consistent technological innovation and investment in SME support programs such as education, consulting, and financing.
Part 2. D-Commerce Financing Program for Scale-up of SMEs
In order to provide SMEs with better growth opportunities, NAVER operates the D-Commerce financing program which comprises Start Zero, Growth Points, and Quick Escrow.
This study explores how the D-Commerce financing program actually affected SMEs’ sales and sales growth rate. Empirical analysis of SmartStore seller data showed that Growth Point, Start Zero, and Quick Escrow had positive impacts on the sales growth of SMEs.
This finding holds important implications for the online SME ecosystem. If online SMEs with no offline stores or sales history for more than one year can secure additional financial resources, it would spur their explosive growth, as was seen with the D-commerce financing programs.
Part 3. SmartPlace, a Free Platform for Offline SMEs’ Digital Connectivity
NAVER SmartPlace is a free admin tool that allows offline SMEs to directly manage the business information displayed on the local search & discovery platform. Offline SMEs can use SmartPlace to provide information about their business without building a website, while also enjoying free exposure and advertising on NAVER local search & discovery services such as integrated search, SmartAround(AI based recommender system), maps, and navigation. As of November 2020, the number of offline businesses displayed on NAVER’s local search & discovery platform totaled about 3.1 million, of which 58% or 1.8 million businesses are using SmartPlace.
This study shows that the use of NAVER SmartPlace by offline SMEs is helpful not only for improving their online business performance but also for overcoming disadvantages associated with unfavorable store locations and low popularity. Given that most offline operators are small businesses with low popularity, the use of SmartPlace could have a positive effect on their online business performance. As consumers are using online search tools more than ever due to COVID-19, offline SMEs could actively utilize the free features of SmartPlace to overcome the crisis.
Part 4. AiTEMS, AI Technology for Discovering New Value of SMEs
NAVER is using its state-of-the-art AI technology to provide SMEs with new opportunities for discovery and growth, while also providing users with a convenient tool for discovering useful products. AiTEMS is a deep learning-based shopping recommender system that helps users find the products they want easily by analyzing user preferences and product characteristics. Lesser known SME products can be discovered by users who are more likely to buy the product via AiTEMS.
Through continuous improvement of AI technology, the use of AiTEMS in NAVER Shopping has steadily increased since its introduction in 2017. As of November 2020, 25% of NAVER Shopping users were using the recommendation service, while 11% of product clicks were made on the basis of recommendations. With additional efforts to improve the quality of recommendations to meet the increased demand for online shopping during COVID-19, the number of AiTEMS recommendation users increased 40%, the number of product clicks via AiTEMS rose by 70.5%, and the gross merchandise volume via AiTEMS surged by 83.6% as of November 2020 compared to the figures in January.
This study explores the positive impact of AiTEMS on SME performance and user satisfaction, with a focus on the following four areas: ① providing SMEs with opportunities, ② reflecting market demand, ③ improving product selection by alleviating product uncertainty, and ④ improving product selection based on personalized recommendations. The findings highlight important socio-economic benefits of AI technology. Through data, this study shows that AI recommendation technology that reflects user characteristics mitigates the “superstar” focus, alleviates the polarization between products and stores, and gives SMEs opportunities for discovery and growth.
Part 5. Biz Advisor, a Free Solution that Provides SMEs with Data Insights
Biz Advisor is a free analytics tool that helps SmartStore sellers review their sales data and derive insights. It provides not only detailed data on daily and weekly sales for each product, but also specific data such as inflow by channel and keyword, conversion rate, and contribution amount. It can also show the effectiveness of the marketing tools adopted by each store. Through Biz Advisor, sellers can manage their inventories and advertising plans or provide customized products according to the characteristics of major customer groups.
NAVER strives to enhance the functions of Biz Advisor so that new sellers in particular can take advantage of it more easily and in more diverse ways. As a result, Biz Advisor is widely used by new sellers on SmartStore who joined due to COVID-19. As of December 2020, the daily average number of Biz Advisor users increased by 89% compared to the previous year, and total visits surging by 151%. Usage of Biz Advisor also increased, with the number of page views per visit (PV) increasing by 60% compared to the previous year.
This study conducted an empirical analysis to determine whether the use of Biz Advisor actually affected SMEs positively based on SmartStore seller data. This study is meaningful because it uses experimental research techniques to empirically confirm that Biz Advisor helps SMEs boost their sales by up to 54%. Due to the spread of COVID-19, consumers’ purchasing activities have rapidly moved from offline to online. If SMEs use Biz Advisor more actively, they will be able to complete their digital transformation more successfully.
