Management Information Systems
Individual Assignment < Business Model of NAVER >
1. Key business
NAVER is operating various business such as search platform, commerce, contents, cloud and fintech. The key
businesses among these businesses are search platform and commerce that account for 52.8% and 20.5% of total
revenue respectively.
- Search Platform : NAVER is the biggest search portal in Korea, and it provides useful search results through NAVER
Blog, NAVER Café, and Knowledge-iN created by the participation of a number of people. Through this service, Naver
gathers a lot of information and uses it to improve search technology in order to increase satisfaction of users.
- Commerce : NAVER has launched commercial service through Smart Store, Brand Store, and Shopping Live. For
sellers NAVER provides e-commerce channels and comprehensive solutions and for buyers, NAVER links search
results and store which enables smooth shopping and offers NAVER Plus Membership.
2. Key sources of revenue and profit
- Advertisement : NAVER makes revenue through two types of advertisements on the search portal. First type is
‘display advertisement’. Various types of advertisements can be posted on Naver main as well as smart channels,
sub and bands through display advertisements. Especially, performance-type advertisements that receive
advertising fees as many times as users click increase revenue. Second type is ‘search advertisement’. Site search
advertisements that display site URL when users search for keywords in NAVER search portal are the representative
products.
- Commission : Naver earns brokerage fees in return for providing online markets through commerce business.
Specifically, fees vary depending on how sellers enter NAVER Shopping. In the case of operating an existing shopping
mall, a fee may be paid according to the number of clicks on the product or a fee may be paid at a fixed monthly
cost. If seller enters Smart Store, sellers must pay a 2% commission.
3. Differentiation from competitors
- Search Platform : In the search platform area, Google and Daum are the main competitors of NAVER. To
differentiate it from its competitors, NAVER has launched “Knowledge-iN Expert”, a service that allows users to
consult professionals directly for audio and video and “Influencer Search”, a service that enables closer connection
between influencers and users.
- Commerce : In the commerce, Coupang and SSG.com are the main competitors of NAVER. Unlike these companies,
NAVER has set ‘Achieving shared growth with SMEs” as one of its main goal. NAVER used its technology and service
capabilities to support SMEs, which is producing good results of increasing the size and loyalty of Smart Store users.
Also, NAVER is expanding its e-commerce ecosystem by NAVER Plus Membership including NAVER Pay points and
collaborating with various brands.
[Reference] : NAVER Annual Report 2020, NAVER Audit Report 2020, NAVER Earning Release 2021 2Q