Internet retailing is increasingly popular around the world. Big retailing countries USA and China lead sales, but internet retailers should also look at South Korea.
South Korea has already well-developed ground for e-commerce players. According to Euromonitor International, Internet retailing makes up 24 percent of the total retailing market in South Korea, the highest in the world. In last November 2018, SoftBank Ventures made an additional $2 billion investment in Coupang, one of the biggest internet retailing company in South Korea famous for 24 hours delivery after a check-out.
Source: Euromonitor International
Payment service boosts internet retail sales
South Korea consumers are tech-savvy, but it is not only millennials. Due to well-developed digital connectivity and high penetration rate of smartphones, mid-aged consumers in their 40s and 50s easily use technology in their daily life. Payment platforms such as Kakao Pay, Naver Pay are developing fast. Digital payment made faster and simpler means more consumers will be expected to use e-commerce.
Source: Euromonitor International
24 hours delivery was a game changer, but still?
Coupang’s rocket delivery was innovative at first stage, but many of other players are entering the “delivery war” to guarantee delivery within 24 hours or by the next morning. Coupang’s rocket delivery itself is losing its competitiveness. Though Coupang has taken the leading position of delivery service, consumers are sensitive to price and service, making it easy to switch to better options.
As cross-border e-commerce increases, foreign internet retailing players such as Amazon are also entering the “delivery war” by starting direct delivery service to South Korea to reduce delivery time compared to before when third party freight companies were needed.
Will there be a potential to grow?
Although internet retailing in Korea is already over-crowded by local players, internet retailing in South Korea still has a lot of potential. While South Korea’s internet retailing market is already highly developed compared to other countries, internet retailing is still expected to grow at double-digit rate.
Rapidly growing cross-border e-commerce will be one of the key drivers of that growth. Alibaba is aggressively expanding international delivery services, providing Korean language support since 2016. Othe fashion such as YOOX and Mytheresa are also starting to provide direct delivery services previously handled by third party flight companies.
As online retailing rises, South Korean consumers have more opportunities to compare price, products and brands across local and international retailers. Foreign online retailers are actively expanding their business to meet South Korean consumers’ needs.
Mobile payment platforms have also been developing rapidly by various players including mobile manufacturers, retailers and IT companies in South Korea. We expect these platforms to gain popularity as they reduce check-out time. Advanced technologies and logistics system are driving companies to seek opportunities in internet retailing in South Korea.
Source: Euromonitor International