South Korea is a Smart Ecommerce Market!
In 2016 South Korean ecommerce is expected to total nearly $38 BILLION (USD) and is projected to surpass the $50 BILLION (USD) mark by 2018. As the most popular mobile phone country in the world, fully 90% of South Koreans own a Smartphone. This means that mobile ecommerce sales will continue no doubt, to increase at an impressive rate.
Let’s take a look at some “key” information regarding the South Korean ecommerce market to better understand what this opportunity truly represents.
- South Korea is home to the third largest Asia-Pacific retail ecommerce market place.
- Mobile (online) ecommerce sales have increased an astounding 64% over the past two years.
- 5% of the population lives in urban centers, with Korean (97%) being the most popular language.
- The country has the second highest digital buyer percentage in the Asia-Pacific region, with 65% of internet users currently shopping on line.
- The two major holidays that bolster ecommerce sales are White Day and Thanksgiving.
- Because of the small geographical size of the country and the high population density in their urban centers, South Korea enjoys exceptionally fast fulfillment rates.
- The country boasts some of the fastest internet speeds in the world today, making online commerce particularly attractive.
Why are Ecommerce Retailers Here?
As technology has developed and become increasingly widespread, South Korean shoppers are relying less on local shops and more on digital storefronts. Since the country boasts some of the fastest internet speeds anywhere in the world, online shoppers enjoy minimal interruptions with their internet service and find they are able to “cover a lot of digital ground,” in highly efficient increments.
The two major “spikes” recognized by ecommerce sellers for South Korea takes place one month after Valentine’s Day on a gift-giving holiday known as White Day. The second major spike in internet sales occurs during the Thanksgiving Day holiday in the US. While South Koreans don’t observe the Thanksgiving Holiday, they do a great deal of shopping on line to take advantage of the deep discounts that occurs around the Black Friday phenomenon. In fact, cross-border purchases from the US increased by 109% during the 2015 Black Friday Holiday.
Cross-Border shopping is most common among the digital buyers ages 25-34 (46%) and in households with children (45%). South Korean online shoppers primarily buy from the U.S., Japan and China. The main reason for shopping overseas (online) is a desire for the Korean buyer to secure better quality products at more reasonable prices.
Though South Korea is not a popular shopping destination, consumers in Singapore and China consistently purchase from the nation. In fact, 21% of online shoppers from Singapore chose South Korea as a “top destination,” for shopping……and fully 16% of China’s web based buyers followed suit.
As South Korean buyers have increased their purchasing habits online, the top payment methods for these transactions have reflected the following trends; 52% of digital purchases are paid for with credit and debit cards followed by direct debit (16%) payments and then bank transfers making up 10% of those purchases.
One of the most notable ecommerce characteristics prevalent in South Korea today is the extremely fast shipping they utilize for commerce and online sales. The nation has exceptionally fast fulfillment rates compared to other leading online retail countries. Multiple online marketplaces have deployed initiatives to build networks of modern, new distribution warehouses throughout the various urban centers. This allows for highly efficient delivery systems that are capable of consolidating products purchased from different sellers into one single box.
Top Selling Products
The South Korean consumer is a very intelligent and savvy shopper. They gravitate towards unique and high quality products. They are interested in premium quality, advanced formulation cosmetics as well as herbal remedies for various ailments. They purchase travel-related goods and services followed by clothing and fashion products. Household goods are also a very big retail vertical for these online buyers. The aforementioned products make up fully 70% of their targeted ecommerce purchases.
The South Koreans also purchase high quality electronics, cellular phones and lap tops/ tablets. These online purchases make up the majority of the rest of their ecommerce focus. These intelligent shoppers also focus on discounted pricing and/or sale pricing on products. They are not inclined to pay full price for anything. This is not to imply they are cheap……..but only very frugal and cost conscious when it comes to their webs based shopping. However, looking for the “best price,” while shopping in no ways means that the South Korean consumer will compromise on customer service. On the contrary, the South Korean people themselves are very warm and service oriented. For this reason, it is expected that they choose to be treated the same way when spending their hard earned currency.
Finally, shipping and immediate product availability count as two of the main qualifiers these consumers look for to “seal the deal,” when they are considering purchasing a product from a specific seller. Interestingly, it seems as though they are willing to pay a bit more and wait longer for products from the US as opposed to products from Japan and China. It is not known if this is solely due to the products themselves…..or if it is also related to the warm diplomatic ties the South Korean people feel towards the United States. In any case, products from the US are the most in demand for the South Korean marketplace.
The Few Extra Steps……..
To be an ecommerce seller in South Korea requires you to take several steps to qualify to do business in their internet marketplace. You must secure a certificate of business registration in South Korea; you must submit a bank statement to prove you are a legitimate business, a passport copy of the representative shown on the business registration and other additional seller information. While the submissions of these documents may seem unusual, they actually are considered a positive by most other ecommerce businesses that choose to sell in this country. It is expected that these additional requirements separate the legitimate, full-time sellers from the small “jobbers,” or part-time ecommerce “dabblers,” who may appear to compete with these traditional sellers.
South Korea is a big, competitive ecommerce marketplace. Ecommerce sellers that are considering selling their products in South Korea should first carefully assess if their products are unique enough to separate themselves from the existing offering already available in the marketplace. If after making that assessment they decide to move forward……..with the right amount of effort, they will not be disappointed if they chose to enter the South Korean marketplace.
