Andrej Sokolow/picture alliance via Getty Images
Amazon plans to invest roughly $300 million in South Korean e-commerce company 11st, according to local reports, continuing its efforts to expand in overseas markets this year.
The investment is part of an official partnership announced on Monday, under which Amazon agreed to sell select products to Korean customers through 11st, the e-commerce subsidiary of SK Telecom.
The $300 million investment was first reported by Chosun Ilbo and Donga Ilbo, two of the country's largest daily newspapers, citing unnamed industry sources. Depending on the partnership's performance, Amazon could own up to a 30% stake in 11st, which was last valued at roughly $2.5 billion, according to Yonhap News Agency.
Amazon's spokesperson declined to comment on the investment amount. 11st's representative wasn't immediately available for comment.
Amazon's move into South Korea shows the company's continued commitment to international expansion. This year alone, Amazon has launched new marketplaces in Sweden, the Netherlands, and Saudi Arabia. It also pledged to invest an additional $1 billion in India earlier this year, after having spent roughly $7 billion in the region previously. Last year, Amazon opened new marketplaces in the UAE and Singapore.
The expansion follows strong performance in Amazon's international business, which bounced back to over 37% sales growth in two straight quarters, in large part due to the COVID-fueled shift to online shopping. Amazon's international business, which currently runs 17 marketplaces around the world, had shown deceleration in recent years, dropping to 13% sales growth for all of 2019.
For Amazon, a $300 million investment is a drop in the bucket. The company is sitting on almost $70 billion in cash and short-term securities, and has been enjoying record profits and revenue growth this year, thanks to the lockdown-driven demand increases.
But Korea has long proven to be a challenging market. Despite years of rumors of launching in Korea, Amazon has never established a real presence in the country, and currently is mostly focused on selling its cloud service there. There's also strong competition from incumbents, including Softbank-backed Coupang and eBay-owned GMarket.
It's a missed opportunity for Amazon. South Korea's e-commerce market is the fifth-largest in the world, and is on pace to become the third-largest at roughly $133 billion by 2023, behind only China and the US, according to Euromonitor.
Amazon's investment in 11st also reflects the company's growing appetite for buying minority ownership stakes, instead of majority control, of private companies. As of the end of the third quarter, Amazon owned $3.6 billion worth of private company stock — an increase of more than from 2018.
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