Gmarket Inc. and Auction Co., e-commerce platforms under South Korea’s Shinsegae Group, plan to offer a big reduction in the annual fee for Shinsegae Universe Club Membership in May.

According to industry sources on Sunday, the dramatic fee reduction from 30,000 won ($22) to 4,900 won is part of an event planned to coincide with Gmarket’s biggest first-half sales event, Big Smile Day, boasting discounts of over 80 percent.

The promotion is exclusive to customers who have never been members of Shinsegae Universe Club and who sign up through Gmarket or Auction during the promotional period. Those who register in May will also enjoy a one-year free extension of their membership.

Launched in June last year, Shinsegae Universe Club integrates benefits from six Shinsegae Group companies, including Gmarket, Auction, Emart, SSG.com, Shinsegae Department Store, Starbucks Korea, and Shinsegae Duty Free.

On Gmarket and Auction, members receive four special coupons monthly, including a 12 percent discount coupon and unlimited 5 percent discount coupons.

Orders over 15,000 won with Smile Delivery are shipped for free, and daily food delivery comes with a 2,000 won discount.

Additional benefits include three to four coupons for a 5 percent discount at Emart and SSG.com, plus four free beverage coupons available at Shinsegae Department Store’s members’ bar.

Shinsegae Universe Club membership effectively turns the annual fee into store credit: paying 30,000 won in fees instantly grants the member 30,000 won in shopping credits.

During the promotional period, the 4,900 won fee is expected to also be converted into equivalent shopping credits for new members.

The fee cut plan comes amid retail giant Coupang Inc.’s recent increase in its WOW membership monthly fee to 7,890 won.

The monthly fee for a Coupang WOW membership is only for membership, which means the money cannot be used for shopping.

However, the strength of the WOW membership guarantees unlimited free shipping.

Loyal customers take advantage of this by ordering five items of clothing in different sizes and getting free shipping, and returning the four that do not fit for free.

The strategic move by Gmarket is seen as an attempt for a turnaround after its acquisition by Shinsegae Group in June 2021 for 3.44 trillion won.

Gmarket suffered losses for several quarters following the acquisition but managed to return to profitability in April of the previous year. The company has since been executing various strategies to enhance profitability, including hosting an e-commerce seller conference in Shenzhen, China, aimed at increasing market share there by attracting Chinese sellers to its platform.

With the recent increase in Coupang’s membership fee, the e-commerce industry is closely monitoring whether this will lead to consumers switching to rival platforms.

Besides Shinsegae Group, companies like Naver and Kurly are also leveraging memberships to secure customer loyalty. Since its launch in August last year, Kurly’s membership size has tripled in six months as it offers benefits such as free delivery for orders over 20,000 won.

Naver Plus membership offers discounts up to 5 percent on shopping, bookings, and travel for a monthly fee of 4,900 won.

By Park Chang-young and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]