E-Commerce In South Korea - A Detailed Analysis | KR SOURCING
Updated: Feb 9
South Korea is one of the largest markets of eCommerce in the world right now. According to some stats, it is the 6th largest e-commerce market right now. Last year in 2019, the e-commerce industry of South Korea Generated over US$61 Billion in revenue. These figures are even higher than the most developed European countries like Germany and France.
In 2020, the revenues are increasing as new brands are emerging rapidly, and the existing brands are also upgrading themselves to cope up with the competition. We have seen a significant increase in the trends of online shopping in South Korea in recent years. Most importantly, the concept of mobile shopping has accelerated a lot of growth in the e-commerce industry.
In this article, we will have a detailed discussion about the retail market of South Korea. We will also put some facts and figures to help you understand how rapidly this industry is growing and how consumers and retailers from all over the world are benefiting from the E-commerce market of South Korea.
Internet Access In South Korea
Having one of the fastest internets in the world and with an online penetration of 92%, South Korea is ranked in the list of world's topmost connected countries. According to a Korean government survey on nearly 19 million households, almost 99.2% of them are connected with the internet and have access to the internet via optical cables, LANs, modems, and other wireless technologies. Almost 99% of people in Korea go online at least once a week. The average time that a person spends on the internet in a week is 14.5 hours in Korea.
There are around 5 million people in Korea that are aged 60 or above 60, and they spend most of their time surfing the internet on their web browsers. Almost 50% of people from this age group uses the internet for instant messaging and other activities to pass their time. If we compare South Korea in terms of mobile phone usage with other countries, it is ranked 6th globally. Almost 78% of people in Korea have their personal cell phones.
E-commerce Market of South Korea - Stats and Numbers
If we compare the South Korean e-commerce market with other Asian countries, it has the third-largest market in Asia. The domestic e-commerce marketing is rising day by day. Back in 2016, according to a survey, the online domestic purchases of South Korea reached 55.9 Billion USD from 47.6 that was recorded the previous year. Now it is 2020, and the domestic e-commerce revenue is expected to touch 74 Billion USD by the end of this year. It is expected that by 2024 these numbers will be much higher and can reach 95 Billion USD in revenue only. These numbers are huge if you compare it with the market of other countries. All this is happening because the internet architecture of South Korea is well developed. The e-commerce industry has gained a lot of popularity in the past few years. According to a research report, almost 50% of internet users purchased things from the internet market. From this 50% of people, almost two-thirds of are those that purchase things from the internet on a monthly basis. The most popular categories in which online sales were made are Clothing, cosmetics, travel, and electronics.
With the growing popularity of e-commerce, many universities in South Korea are now offering courses related to e-commerce and m-commerce. It is because half of the online purchases in South Korea are made through mobile devices. Smartphones are the most preferred devices for online shopping nowadays. There are many popular apps for online shopping in South Korea. 11Street and Coupang are the two largest names in the e-commerce industry of South Korea, and both of them have millions of users. But, still, eBay South Kora holds the largest share on online sales in this industry.
If you talk about e-commerce websites, then there are several other e-commerce websites in south kora such as Auction, G-market, TMON (Ticket Monster), And We Make Price, etc. Amazon also provides its services in South Korea, which is also one of the largest e-commerce websites. Online purchases from foreign sellers and vendors are also increasing day by day because Koreas find low prices on foreign websites even after paying shipping and customs. If we have a look at the numbers of online foreign purchases made from South Korea, then the figures reached 1.6 Billion back in 2016.
If we talk about B2B e-commerce, then there is no official data available, but still, many companies want to invest in the B2B market of South Korea. G-Market is the pioneer of B2B e-commerce in South Korea as they were the first one to launch a B2B shopping site called 'Biz on' back in 2012. Auction also jumped in the B2B e-commerce industry and launched two B2B e-commerce sites known as "Biz Club" for ingredients and food-related materials and "Biz Plus" for other different kinds of products. Inerpark also launched a platform known as "I market Korea," which is based on both B2B and B2C business modules. Wemakeprice also started a platform back in 2016 known as "Wemakeprice Bizmall."
There are around 5.4 million business owners, along with 3.5 small to medium-sized companies in the B2B e-commerce market of South Korea. The competition tends to be increasing as the number of companies is growing, and the e-commerce market of South Korea is expanding day-by-day.
Top Online Stores In South Korea By Revenue Earned in 2019
According to revenue earned in 2019, we have enlisted some of the top online stores in South Korea. SSG.com is the biggest player in the e-commerce market of South Korea as it generated US$410 Million of revenue in 2019. It is followed by another well-known brand yes24.com that generated S$306 million in revenue in e-commerce sales. Apple.com is 3rd with US$293 million in revenue.
The stores are ranked on the basis of revenue they earned in 2019. Although some of these stores have international reach and they serve on both local and international levels, but the rankings are based on the revenue that they generated in South Korea only.
There are many stores that you can consider rising talent in the e-commerce industry of South Korea, such as sivillage.com, because their growth rate is very high. Each year there is a considerable increase in the number of sales and revenue.
Some Detailed Statistics on E-commerce Sales and Customers
If we take a look at the stats, then the most popular products sold by the online vendors and sellers in South Korea are as follows:
● Travel And Reservation services (17.4%)
● Electronics and Home Appliances (11%)
● Fashion And Clothing (10.6%)
● Home and Car Accessories (10.2%)
● Beauty and Cosmetics (7.9%)
● Computers and Computer Accessories (6.2%)
For the first time in history, the e-commerce sales of South Korea have crossed the hypermarket sales making e-commerce one of the largest channels for shopping in South Korea. The average profit per user is estimated at US$ 1,150. The most active people that are involved in online buying and selling belong to 20-29 and 30-39 age groups. The numbers are still low for other age groups, but they are increasing gradually as more and more people are shifting towards online shopping.
The brands and stores know this very well that if they want to survive in the market, then they have to offer online services. Therefore, almost all famous brands have their websites on which users can comfortably purchase their products by sitting in their homes. They are trying their best to offer the best online shopping experience to their customers, and for this purpose, many popular brands have made huge investments.
With the increasing competition in the e-commerce market, the key to success right now is fast delivery. No one likes to wait so long to get their products delivered at their doorsteps. Therefore most customers prefer those online stores and websites that offer swift delivery services. Coupang, one of the most popular e-commerce sites in South Korea, has invested 1.3 Billion USD to cope with this need and build a logistics infrastructure for its fast delivery. They named it "Rocket Delivery," and they claim to deliver the products within 1-2 business days all over South Korea.
People prefer to shop online, even from their close by shops, because due to high competition, different brands offer various sales and discounts to surpass their competitors. So, people can enjoy these discounts and save some money.
What Kind of Payment Methods Exist in South Korea?
Providing optimized experience at checkout is very important, especially for international buyers. It has a huge impact on your sales and conversion rates. Therefore it is crucial to provide international payment methods and currency conversions with suitable shipping.
Impact of Social Media On E-Commerce Industry of South Korea
Almost 84% of the population of South Korea are active social media users. Social media platforms like Facebook and Instagram are used widespread. The e-commerce business owners know the importance of social media networks, and they mainly use Facebook for the advertisement of their products and services. It is because Facebook is the most used social media by the South Koreans. Although there are many other local platforms and instant messaging apps, no one beats Facebook as it is an all in one platform for both retailers and consumers. There are a lot of small and home-based e-commerce businesses that are only being run on Facebook. People create their selling pages on Facebook and list their items on the pages. The consumers can view those pages and can order any item of their choice by messaging directly to the retailers. Their business requires very little investment, and the ROI is also good.
Not only small businesses, but there are many big brands that use social media like Facebook and Instagram as their first-hand marketing tools. They spend massive money to run advertisements on social media because they know that young people especially spend a considerable amount of time on social media on a daily basis. So, social media has played an important role in the growth of the E-commerce industry of South Korea.
South Korea is an advanced country, and there is a lot of potential for e-commerce business. South Korea has a pretty versatile market. The people are very advanced and know how to use the internet and cell-phones to shop online. It is expected that in the coming few years, South Korea will have the leading market of E-commerce and will surpass many European countries that are on the top right now.