KaKao

Polygonal diversification of the Gifts context

 

About 7 out of 10 Koreans have tried sending and receiving something via KakaoTalk Gifts. Gifts have always been exchanged to celebrate special occasions between close acquaintances. However, we are witnessing the practice gradually change—an invigorating drink for a burned-out friend or a pizza for someone who has reached their diet goals. Gifts are now in daily messages and chats.

 

The new concept of 'Purchase for Others' and its user-centered operation policy have served as the foundation for the solid growth of KakaoTalk Gifts. On the 10th anniversary, we invited Simon and Lane to discuss the present and future of the service.

 

# “Today is my birthday!”

A bit awkward to disclose, even between close acquaintances. However, circumstances change if someone calls attention, "Are you guys aware that today is oo's birthday?" Lane, the lead of the Gifts Team at Kakao Commerce, insists that 'Friends with Birthdays' on the KakaoTalk Friends tab have been woven into the fabric of everyday life.

 

“It remarkably increased the number of users who seemed disinclined to give to others, because they soon started expressing their feelings with gifts. For example, male users in their twenties and thirties, who felt too embarrassed to take care of friends, now get to exchange gifts unreservedly. This big influx of young male users had fried chicken nibbling at the heels of coffee, the previously unrivaled first place gift item. The growth spurt with those over 50 was also phenomenal. It increased by 80% last year and 90% this year. Those who hadn't noticed the Gifts feature soon did as it appeared on the Friends tab and they too started expressing their warm wishes to others through the gift of giving. Taking service value up a notch is one of our important priorities. Emoticon cards you can send with gifts or 'Friends with Birthdays' signs make giving even smoother and more valuable between acquaintances. The Gifts service is now past the period of securing sustainability and making a foothold as a communication tool to express one's heart.”

 

Lane said that he could sense this atmosphere when he saw users post mind-blasting message cards on their social media sites or when he received inquiries on how they could recover mistakenly deleted messages.

 

In 2010, the Gifts service started with only 100 pieces of merchandise from 15 partner brands. Now, in 2020, this e-commerce platform sells 500,000 products partnered with 8,000 brands. All these statistics prove that the service has continued over 2-digit growth rates every year since its commencement. Simon, the CEO of Kakao Commerce, explained,

 

“If merely the number of products or sales volume are considered, the size of open markets or social commerce is much bigger than Gifts. It is common in the e-commerce industry that product types or transaction volume represents growth potential. Interestingly, Gifts has never ever jumped into competition against other e-commerce platforms. Instead, we have focused on altruistic motives and relationship-centered consumption from the start. That is why we carefully handpick products that customers like to give and receive and allow them to enter our platform. In my opinion, The Gifts service helps us to share our hearts and nurture our relationships through the extension of gratitude and words of encouragement. The more users use the service, the more often they realize that they can warm someone's heart. In this way, the virtuous cycle or 'Objet' beautifying online and offline relationships has occurred, differentiating our platform from other e-commerce players.”

 

 

# Contextual Diversification

The Gifts service that features 'gifting like chatting' is now deeply planted into the fertile soil of KakaoTalk. The act of gifting on mobile devices does count as common sense. Still, some have not experienced it yet. How can KakaoTalk Gifts engage them on the platform?

 

“I found it most important to experience receiving a gift via a mobile device. As users experience effectiveness, convenience, and emotional exchange with the service, they become loyal before they know it. Data analysis revealed that over 30% of those having never gifted were eventually converted to active purchasers after receiving their fourth gift. Moreover, more than 70% of new purchases were triggered by the receipt of a gift from others. So we focus on making occasions visibly felt instead of engaging in direct marketing activities. Those who have experienced the service have brought about the network effect, which irrigates the growth of our service. In the meantime, I think we should make our service better known through other channels apart from the network effect occurring on the More tab or in chatrooms. Older adults who neither knew nor were familiar with Gifts have now eased into using mobile devices in this new contact-free era caused by COVID-19. We need to leverage different types of advertisements, such as electronic bulletin boards in apartment elevators; places that they're familiar with,” Simon explained.

 

Lane added that the 'unexpected discovery' of exciting and endearing products has inspired people to share joy and laughter in their daily lives.

 

“There were times when mobile coffee coupons were perceived as strange and unfamiliar. However, presenting coffee coupons became common to the extent that daily coffee sales account for 200,000 cups on average.  Korean traditional liquor is another example that successfully increased product affinity through Gifts. On our platform, 1,200 traditional liquors from every corner of our country sell with a good reputation. Luxury brands deserving the 'first floor of department stores' also entered the platform and are highly regarded by our users.  A wide selection of merchandise, from sundries to apparel and small luxuries like accessories and lipstick, has diversified the gifting context.”.

 

# Gifts of Tomorrow

Gifts is well-regarded as one of the most effective services at Kakao Commerce and even among Kakao subsidiaries. Its traffic transits to other Kakao services to bring about leverage and synergistic effects. One such example is the fact that products that have proven popular on Makers and TalkDeal and that were then added to the Gifts platform have achieved much more fruitful outcomes than others.

 

This messenger-based commerce platform, however, has a pending issue despite its continuous and rapid growth. Lane pointed out that the service needs to resolve the skewed distribution of sales to 'special days.'

 

“In 2019, daily sales on Valentines' Day and Pepero Day were more than twice as high as average daily sales. (* Pepero Day refers to November 11th when couples give each other Pepero, a cookie that looks like a stick or the number 1.) The Gifts service is more deeply woven into the fabric of our daily life than it was, yet still leaving room for further improvement. It is likely that we will be able to resolve the issue of sales biased to particular days if we improve service accessibility for corporate users. A complementary service is scheduled to be launched within the year.”

 

Gifts will have a wide range of spheres of activity, not to speak of mobile and KakaoTalk. Users can search gifts on the PC version of KakaoTalk. Also, the payment solution will be well-equipped by the end of the year. Simon predicts that such an improvement will "enlighten users staying in relatively 'grey areas' of the service so that they can experience the Gifts service more conveniently." He also added,

 

"Gifts is free from dumping wars and competitive discounts and far from conflicts of interests against its users and the companies it partners with as the service itself is strongly coupled with KakaoTalk. That is why it is called the "service gifted by God" in the industry. We're given more opportunities to try novel pathways than others and will continue various attempts to enhance user value - to name a few, sharpening the competitiveness of  PB lineups or adding impressive narratives to partner products.  I bet Gifts will magnetize the remaining 30% of Koreans who have yet to experience it very soon."

 

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It is unprecedented that 'gifts' are exchanged seamlessly in the arena of online communication. Those gifts sent and received in chatrooms have gradually changed the everyday life of Koreans. KakaoTalk Gifts took the 'road untaken' and all eyes are on the new landscape this mighty locomotive of Kakao Commerce will s

About 7 out of 10 Koreans have tried sending and receiving something via KakaoTalk Gifts. Gifts have always been exchanged to celebrate special occasions between close acquaintances. However, we are witnessing the practice gradually change—an invigorating drink for a burned-out friend or a pizza for someone who has reached their diet goals. Gifts are now in daily messages and chats.

 

The new concept of 'Purchase for Others' and its user-centered operation policy have served as the foundation for the solid growth of KakaoTalk Gifts. On the 10th anniversary, we invited Simon and Lane to discuss the present and future of the service.