E-commerce in South Korea continued to record impressive double-digit current value growth in 2021, as the lingering impact of COVID-19 further influenced consumers’ shopping patterns. Although there was no official closure of retail stores, many consumers continued to prefer online shopping rather than quickly returning to physical stores.
In 2021, mergers and acquisitions in South Korea intensified with major deals taking place throughout the year. Within retailing, the acquisition of promising e-commerce companies by traditional bricks-and-mortar players or larger e-commerce competitors caused significant disruption.
Coupang, South Korea’s e-commerce unicorn, became a listed company on NASDAQ as of March 2021. Coupang’s extensive product coverage and its signature dawn-delivery service continued to attract new customers, especially in cities outside of the Seoul Metropolitan Area due to the company’s investment in the expansion of delivery networks by building new warehouses in big cities such as Daegu and Gwangju.
Given the rapid channel shift from store-based retailing that took place in early 2020, e-commerce’s share of total retail value sales was already substantial in 2021, resulting in a record high figure. Over the forecast period, the channel’s penetration is expected to gain further momentum as it provides clear values to consumers, such as fast delivery, enhanced customer service, competitive prices, and a large number of customer reviews that aids the decision-making process.
Historically, e-commerce in South Korea gained momentum along with the introduction of online marketplace business models. Brands and store-based retailers did not hesitate to register as sellers on leading marketplace platforms as it saved costs and effort compared to launching a new website.
Albeit remaining low, sales of foreign e-commerce witnessed steady growth in the past decade, and regained some lost share in 2021. The rapid growth of foreign e-commerce has been driven by South Koreans’ aspirations to own imported goods, while the launch of foreign e-commerce shopping platforms, especially by luxury players, has also played a key role in expanding consumers’ spending on imported items.
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Sales of consumer goods to the general public via the Internet. Please note that this includes sales through mobile phones and tablets (i.e. m-commerce). E-commerce includes sales generated through pure e-commerce websites and through sites operated by store-based retailers. Sales data is attributed to the country where the consumer is based, rather than where the retailer is based. The definition of e-commerce is agnostic as to where actual payment takes place; if an order is initiated online, it is considered to be an e-commerce transaction, even if the order is ultimately paid for in-store (or elsewhere). As a result, all ‘click-and-collect’ and ‘collect-at-store’ transactions are counted as e-commerce sales. E-commerce excludes sales of: (a) Consumer-to-consumer (C2C) and business-to-business (B2B) sales, although please note that sales between businesses and consumers (i.e. B2C sales) on sites such as eBay are included; (b) Sales of motor vehicles, motorcycles and vehicle parts; (c) Tickets for events (sports, music concerts, etc.) and travel; (d) Sales of travel and holiday packages; (e) Revenue generated by online gambling sites; (f) Returned products/unpaid invoices; and (h) Internet sales from direct selling companies, as these are tracked in Direct Selling market size/shares. Example e-commerce brands include Amazon.com, Zappos.com, Apple.com, iTunes, Rakuten, Tesco.com, Dell.com, Coles Online, etc. 3rd Party Merchant sales through online marketplaces, such as Amazon.com, eBay.com and Walmart.com, are included and split out in shares. 3rd party merchants are the summation of sales that come from businesses that are present on an online marketplace (e.g. Amazon, Alibaba). Marketplaces are websites that allow multiple merchants to sell on the marketplace website, with the marketplace operator processing the transactions, but many marketplaces provide offer other services as to help with shipping, handling, payment, and product storage. The marketplace is not the merchant of record legally, but for the sake of shares, sales from 3rd part merchants are attributed to the marketplace brand operator.See All of Our Definitions
This report originates from Passport, our E-Commerce (Goods) research and analysis database.
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