Last month, Mr. Kim, a university student in Seoul purchased clothing from Social Commerce. Several days later, Kim realized that the merchandise he had received was quite different from what he had seen on the internet. Kim attempted to get a clothing refund from the real offline shop, however, the offline shop rejected his request and shifted responsibility onto Social Commerce.

Social Commerce is a way of selling items at a reduced price when a certain number of people are gathered together. In other words, Social Commerce is a kind of discounted group purchase. Recently, Social Network Service (SNS) is booming and the market of Social Commerce is rapidly growing.  Social Commerce can give discounts off the listed price from a minimum of 50 percent to maximum of 90 percent. Distributors are anticipating great demand from their promotions and also a quick-returns policy. When using Social Commerce, a high percentage of discounts are provided when a certain number of people are gathered.

Therefore, customers need to search for people who they want to purchase an item with and the sellers just need to put the items on the internet. Customers can make group purchases and the marketing expenses will dwindle. Last year when Social Commerce was introduced in Korea, it was appraised as Blue Ocean as a ground-breaking business area and the prospects of over a trillion market scale.

Social Commerce enterprises have lately begun to decrease after they began to expand the number up to 700 following Ticket Monster last May. Last April, five university students gathered together and founded a new Social Commerce enterprise, 'Pretticat' containing alternatives which could resolve the problems of the existing business. The Post interviewed two of the five representatives of the company, Choi Beom-seok and Kim Hyuk-joong and asked them about the problems facing the Social Commerce market and the corresponding alternatives.

Social Commerce began in 2008 from American enterprise called Groupon. From May of 2010 Korea started to run a related business. By giving nearly a 50 percent discount, the Social Commerce business was making for a win-win strategy for both customers and distributors. Choi said, "We are mainly targeting women in their 20’s and 30’s. It is obvious because we are targeting people using SNS and those age groups usually use SNS." When asked about the reason Social Commerce has boomed in Korea, they both said that the items only need a small amount of capital when compared to other business and have low entry barriers.

Also when asked about the process of their foundation, Kim began to tell their story. "We prepared for our foundation from August of 2010. All of our 5 members felt the drawbacks of the present Social Commerce and gathered to open a new enterprise which could improve this situation." Kim Hyuk-joong, Choi Beom-seok, Kim Min-ji, Na Byung-yoon and Kim Min-young are five representatives of 'Pretticat'. These five people first met through a web site for university students called, 'Spec-up'. With the same purpose, they founded the company.

"The most serious problem is a lack of service from the distributors. Customers were unsatisfied with the distributors treating customers differently." Although customers utilizing Social Commerce coupons pay discounted amount of money they are the same customers who pay the original price. However, some distributors which had contract with certain Social Commerce enterprises did not treat the customers equally. Also, there were no conceptions of a regular customer. When customers visited Social Commerce, the benefits were not returned to customers and the enterprises equally. In reality, people hardly revisited the store again. In other words, Social Commerce was not benefiting from the effects of the promotion but was just making many one-off events.

To resolve these drawbacks, 'Pretticat' set forth to differentiate themselves from the competitors. First of all, they made a different system compared to the existing enterprise. Other Social Commerce updates their merchandise each day. However, 'Pretticat' holds their merchandise for more than three days. This is helpful for both customers and distributors. This hinders customers to buy something on impulse and provides a longer exposure of the information of the merchandise. Second, they first created membership cards to resolve the problem that the customers rarely revisited the store after benefiting from the Social Commerce service because of price burdens. 'Pretticat' made new deals with the stores to provide future discount for customers. They said, "As a result, the percent of revisiting the store has increased tremendously up to 15 times more than before.

The last solution is to allow customers to make choices for when they would like to use the service. Usually the time when people visit the store is on the weekends and night times. Therefore if Social Commerce enterprise provides too many coupons there is the problem of flooding people at the same time at the same store. To eliminate this drawback, 'Pretticat' introduced a new system.

We asked them if they could give some advice to our university students who are preparing their own businesses. They said, "You should get rid of your fear and challenge your mind. We all applied for leaves of absence and have invested our time to do this. Choi last said, "By the end of the year, we want to rank in the top 10 enterprises in Social Commerce business. We are preparing a ground-breaking system for our customers and you should be excited about this.!"

Park Sung-yeun  tjddbs1104@dongguk.edu

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