On February 7, Naver announced its Q4 2024 earnings. CEO Choi Soo-yeon summarized Naver’s 2025 strategy as ‘On-service AI,’ emphasizing the company’s commitment to enhancing AI technology and applying it to all Naver services for differentiation.

“In 2024, Naver made multifaceted efforts to strengthen the fundamental competitiveness of its core businesses and platform capabilities. To lay the foundation, we unified company-wide service and user behavior data last year, establishing an integrated data analysis environment. We are now integrating this analyzed data with AI technology to optimize the layout of the Naver app and personalize the entire user journey. 2025 will be a pivotal year for Naver to fully implement the On-service AI strategy. We will enhance AI technology to effectively apply it to various products such as search, commerce, and content, thereby creating new value and business opportunities.” - Choi Soo-yeon, CEO of Naver.

One of the key AI-driven products in Naver’s ‘Commerce’ business is the AI shopping app ‘Plus Store,’ which was first introduced on the web version on October 31, 2023, and is set to launch as a standalone app in the first half of this year. Through Plus Store, Naver aims to expand its traditional search-driven shopping experience into a more personalized discovery and exploration-driven one. This strategic vision was discussed in the earnings announcement.

In another core business area, ‘Search (Search Platform),’ Naver has been strengthening AI-driven user analysis and personalized content recommendations, particularly on the Naver app’s main home feed. The company is also expanding its UGC (User Generated Content) ecosystem by collaborating with creators on platforms such as Blogs and Clips (short-form videos), while simultaneously preparing business plans that integrate commerce with these initiatives.

Additionally, Q4 2024 saw significant developments in Naver’s commerce business, such as its integration with Netflix for Naver Plus Membership benefits. These achievements were highlighted in the earnings report. Today, we will explore how Naver’s core strategy, ‘On-service AI,’ is shaping its commerce business.

Three Factors Behind the Rebound Despite Economic Downturn

Before detailing Naver’s Q4 2024 commerce business performance, CEO Choi addressed the current downturn in the e-commerce market. She noted that “the e-commerce market has entered an unusual period of low growth amid overlapping political instability, economic uncertainty, and major social issues.” According to Statistics Korea, the total e-commerce transaction value in Q4 2024 (preliminary) was KRW 62.56 trillion, reflecting only a 1.4% increase from KRW 61.71 trillion in Q4 2023.

Despite the challenging macroeconomic environment, Naver reported strong growth in its commerce business and a second consecutive quarter of transaction volume rebound. In Q4 2024, Naver’s total commerce transaction value reached KRW 13.2 trillion, up 6.5% YoY. Notably, transaction volume from Naver’s own commerce platforms, such as Smart Store and Brand Store, grew by 11% YoY.

The strong performance was also reflected in Naver’s commerce revenue, which reached KRW 775.1 billion in Q4 2024, growing by 17.4% YoY and 6.9% QoQ. Notably, this quarter saw significant revenue growth across all commerce business segments, including advertising, brokerage and sales, and membership, which had previously struggled to gain momentum.

“In December 2024, the Consumer Sentiment Index recorded its sharpest decline since the COVID-19 pandemic in 2020. The market has been further pressured by weak travel and reservation sales following the Muan Airport disaster. However, despite these challenges, Naver successfully launched Plus Store in Q4 2024, carefully observed user and seller reactions, and actively responded to year-end shopping demand. As a result, we achieved meaningful growth, and in 2025, following the launch of a standalone Plus Store app, we plan to accelerate commerce revenue growth through expanded product offerings and enhanced solutions.” - Kim Nam-seon, CFO of Naver.

Naver attributed its commerce growth rebound to three key factors: the Plus Store, the fast logistics solution ‘Arrival Guarantee,’ and the partnership between Netflix and Plus Membership. Let’s take a closer look at each.

① Plus Store: Driving the Rebound in Advertising Revenue

In Q4 2024, Naver’s commerce advertising revenue reached KRW 307.8 billion, growing by 10% YoY and 9.2% QoQ. According to Naver, this marks the first double-digit growth rate in nine quarters. The rebound was largely driven by the performance of ‘Plus Store.’

“Launched in late October, Naver’s Plus Store enhanced the shopping experience by focusing on discovery and exploration. By expanding personalized search features based on Smart Store and increasing user benefits, we successfully achieved two consecutive quarters of transaction volume growth. Since its launch, the Plus Store has been establishing itself as a dedicated space for discovering high-quality products from Smart Store sellers. Additionally, we have observed user behavior aligning with our intended platform revamp, as highly loyal customers increasingly engage with the Plus Store.” - Choi Soo-yeon, CEO of Naver.

Plus Store is a shopping app that emphasizes ‘AI-powered personalized recommendations,’ helping users discover tailored products more efficiently. These recommendations also include personalized ad placements for commerce advertisers. (Notably, Plus Store advertising strategy courses are currently trending among sellers.)

Naver stated that AI technology is optimizing ad content and strengthening ‘precise matching’ to expose a larger product database to users with more accurate and targeted ads. The AI system continuously identifies and optimizes high-efficiency ad placements within the Plus Store user journey, enhancing both ad efficiency and profitability.

“In Q3 2024, our commerce margin dipped slightly due to increased promotional benefits. However, in Q4, we successfully restored our margin levels to previous norms. This was achieved despite offering additional promotions because our shopping search ads improved, leading to increased exposure and a better revenue mix.” - Kim Nam-seon, CFO of Naver.

Naver views its extensive product database as a key strength of its commerce business. Therefore, in 2025, the company aims to further enhance ‘personalization’ to improve product discovery, which also includes personalized ad placements. Naver has set a target for its on-platform transaction volume to achieve double-digit growth, outpacing overall market growth.

② Arrival Guarantee: Strengthening Logistics Further

On the other hand, Naver identified ‘delivery’ as a persistent weakness in its commerce service. To address this, the company has been expanding its logistics solutions under the ‘Arrival Guarantee (Naver Delivery)’ initiative.

According to Naver, the expansion of services such as same-day delivery, free shipping linked to Plus Membership, Seller Arrival Guarantee, and Preferred Date Arrival Guarantee (scheduled delivery) led to accelerated growth in transaction volume for the Arrival Guarantee program in Q4 2024. The company expects continuous expansion of the service coverage in the foreseeable future.

Notably, the Arrival Guarantee free shipping promotion introduced as a Plus Membership benefit in Q2 2023 (offering a KRW 3,500 shipping discount for purchases over KRW 10,000) has significantly contributed to commerce transaction activation. Naver plans to further enhance its logistics solutions in 2025 to maintain its growth momentum.

③ Membership: The Success of Netflix Bundling

The content partnership with Netflix, which was officially launched in November last year, has had a direct impact on increasing Naver's membership revenue. In Q4 2024, Naver Commerce's membership revenue grew by 15.9% year-over-year and an impressive 16% quarter-over-quarter.

According to Naver, this growth was driven by a rapid increase in the daily number of new subscribers following the Netflix partnership. Despite the short timeframe, the Netflix partnership led to a 1.5x increase in new Plus Membership sign-ups compared to the previous period.

What’s even more encouraging for Naver is that the contribution of these new members to commerce transactions has also increased. Naver reports that new members acquired through the Netflix partnership spent over 30% more on Naver Shopping than they did before subscribing.

More than 60% of these new subscribers are in their 30s and 40s. This demographic tends to show higher spending per order and a greater number of transactions than other age groups. Therefore, Naver expects them to become loyal commerce customers in the future.

“New subscribers acquired through our membership bundling with Netflix have shown a significant shift in consumption patterns, with shopping expenditures increasing by more than 30% compared to pre-subscription levels. Additionally, this bundling strategy results in significantly lower churn rates, meaning these users are more likely to settle into the shopping ecosystem for the long term rather than being just temporary users. Moving forward, we will continue to pursue strategic partnerships to expand membership subscribers and enhance shopping revenue per user.”— Choi Soo-yeon, CEO of Naver

Synergy with the Search Platform

Another interesting aspect is the synergy between Naver's search platform and its commerce business. As mentioned earlier, Naver's AI technology is not only applied to commerce but also to its core search platform. A prime example is the ‘Home Feed’ on the Naver app’s main screen, which recommends personalized content based on user preferences.

According to Naver, the daily average time spent on the mobile app’s main screen increased by over 10% year-over-year for three consecutive quarters in Q4 2024. Additionally, the re-visit rate of Home Feed users one day after their initial visit reached approximately 60%, showing that user engagement continues to strengthen every quarter.

A major contributor to the activation of the Home Feed is Naver’s short-form video content, ‘Clip.’ Naver reports that the average monthly daily clip views have surged more than tenfold year-over-year, with a goal of doubling this figure by 2025.

Beyond mere content consumption, Clip also demonstrates potential for integration with commerce. Currently, 40% of all clip content is tagged with store or location information linked to ‘Naver Place,’ making it a useful tool for local commerce marketing.

This year, Naver plans to introduce an ‘Affiliate’ marketing model, enabling clip creators, brand stores, and Smart Store sellers to collaborate. Essentially, Naver is launching a system similar to ‘Coupang Partners,’ where clip creators can promote Naver Shopping products and receive a share of the sales revenue.

“Naver will enhance AI-driven content analysis and curation technology while connecting various ecosystems to ensure that user-generated content (UGC) created by creators receives optimal exposure across all Naver platforms.”— Choi Soo-yeon, CEO of Naver

Awaiting the Launch of a Standalone AI Shopping App

In summary, Naver believes that the discovery and exploration-focused UI/UX enhancements in Plus Store positively impact user activity, including increased page views and time spent on the platform. This, in turn, boosts not only intermediary and sales revenue but also commerce advertising revenue.

“For a service like Naver, which is used by a large number of users daily, changes in usability often lead to short-term traffic fluctuations. However, in the case of Plus Store, traffic has remained stable since its launch, and we see this as a positive indicator. Additionally, the number of clicks on various discovery and exploration feeds within the Plus Store page has increased, and we have observed a positive response to benefits and promotions that were previously underutilized.”— Choi Soo-yeon, CEO of Naver

These changes are expected to accelerate further after the launch of a standalone ‘Plus Store’ app in the first half of this year. With this standalone app, Naver plans to offer a more user-friendly UI/UX, guiding users to familiarize themselves with the navigation and discovery-oriented layouts more efficiently.

Naver also expects that limitations in user data collection due to the lack of a standalone app will gradually improve over time. Furthermore, the company anticipates that strengthening membership benefits and improving delivery quality will create additional synergies, positively impacting the entire Naver Shopping ecosystem.

To summarize, Naver is shifting from a ‘search’ model to a ‘discovery’ model. To achieve this, it is enhancing AI-powered product and content recommendation systems across both its commerce and search platforms. Additionally, Naver is working to build an ecosystem where product and content recommendations mutually reinforce each other. Since promotions and exposure for these services are expected to continue, sellers and brands should proactively monitor and adapt to Naver’s evolving strategy.

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