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Kakao aims for social impact with unique online commerce model

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Published : 2017-03-20 15:22
Updated : 2017-03-20 15:22

South Korean mobile messaging giant Kakao is moving to fulfill its corporate social responsibility with a unique, on-demand production system that benefits both small manufacturers and consumers — Kakao Makers.

Introduced in February 2016, Kakao Makers is a platform on which a company can present a product they plan to make and receive orders for a week. The firm will make that product only if it achieves the “minimum order quantity” — the number of units that must be produced and sold to make a profit.

Kakao Chairman Kim Beom-soo (Kakao)

It seeks to shift the traditional manufacturing model from mass production to smaller, on-demand production which eliminates excess inventory for companies and offers consumers a chance to buy more personalized and unique products.

The idea for the platform came from Kakao chairman Kim Beom-soo who had been pushing for a new systematic business model that could positively impact society, a Kakao spokesperson said.

“Chairman Kim has been seeking to make Kakao a so-called ‘social impact company’ which creates innovative yet financially sound businesses that bring benefit to society,” the spokesperson said.

Until now, Kakao Makers has been offering mostly hand-crafted goods including leather products, accessories, artistic toys and traditional Korean pottery. This year, it plans to expand its product range to include electronic devices, fashion items as well as living goods.

In addition, the Kakao unit is looking to adopt a different delivery timeframe for each product depending on its manufacturing needs. For example, it will shorten the delivery period for hand-crafted goods that can be quickly made from the current two weeks.

For goods that require more time for production — such as electronics and tech gadgets — Kakao Makers will expand its delivery period to as long as six months, it said.

Despite its positive intentions, Kakao Makers is inevitably a slow-paced commerce model that has left many to wonder — does this slow-paced commerce model stand a chance in Korea where ultra-fast delivery services such as Coupang’s prized ‘rocket delivery’ system prevail?

According to Kakao Makers’ Chief Executive Hong Eun-tak, the answer is “Yes.”

“Despite initial doubts about a service that requires up to a month of waiting to receive a product, we have confirmed over the past year that there is sufficient demand for this type of service,” Hong said.

“Now, we plan to a make bolder investment in shifting to transform the traditional manufacturing paradigm and prove that it’s possible to create a business that is both financially viable and beneficial to society,” he said.
 
Kakao Makers, accessible via http://makers.kakao.com, presents new products every Tuesday at 10 a.m., local time. The ordered items are produced immediately once it passes the “minimum order quantity.”

By Sohn Ji-young (jys@heraldcorp.com)