In this post, our e-commerce market explorers team will discover the South Korean e-commerce market. Before moving on to our e-commerce South Korea research, we’ll have an understanding of the South Korean economy in general.
South Korean economy and demographics
As one of the four Asian Tigers, South Korea’s economy constitutes an example of successful development that lessons can be drawn from.
- 51.2 Mn people
- 11th largest economy in the world
- $32,766 GDP/capita
- 82% of the population live in urban areas
Alongside its long-term general success, the South Korean economy also manages to keep up with the growth speed of the global e-commerce industry. Now, it’s time to learn about this promising market.
E-commerce South Korea
As the GenZ kids grow up, the retail industry will more and more be dominated by online shops. They are born into technology, and they adapt to each new technologic advancement without the slightest delay. They prefer doing almost everything online, including shopping.
Unfortunately, we can’t say the same for GenY individuals. They usually have a hard time to catch up with the new technologies and doubt the security of digital shopping sites and online payment methods. This, in turn, cause them to remain distanced to online shopping.
Although the South Korean population is not very young anymore (with its population growth fell from 1% to 0.9%), the country has a unique advantage. Its middle-age citizens are also tech-savvy. The internet penetration rate is 96%, and 88.5% of the people shop via e-commerce. This number is expected to hit 94.4% by 2023.
South Korean e-commerce market has a $65.538 Bn annual sales revenue, with a growth forecast of 5%. Cross-border e-commerce is growing accordingly, and big players like Alibaba provide the Korean language to increase their share from this fast growth.
Trends in South Korean e-commerce market
South Koreans love mobile shopping. 60% of all purchases are via mobile phones, forcing operators to improve their mobile platforms.
As a culture largely influenced by Confucian philosophy, trust is important in business relationships, as much as social relationships. A well-established brand image based on trustworthiness is what a business should prioritize in the South Korean e-commerce market.
One-stop shops are attracting more and more consumers. Companies that have multiple online shops try to merge them into a big single online shop, in line with consumer expectations.
Advantages of the local online retail market
The country’s cosmetic brands are getting more and more popularity in Asia each day, caused by a general increase in its cultural presence. If you sell a local cosmetics brand in your online store, you’re likely to attract Asian consumers that are interested in the South Korean beauty sector.
South Korean consumers have high service expectations, and local businesses live up to their expectations. This is why Korean companies have major after-sales service advantage over foreign companies.
Some tips to improve your game
Delivery within 24 hours, first introduced by the Coupang company, is now adopted by almost all of the online retailers. If you want to stay competitive in the market, you must standardize a fast delivery service.
As we mentioned before, the South Korean e-commerce companies have the advantage of a good quality customer service. Although it is an advantage, it also means that they should continuously improve their game to stay ahead of the competition. In an attempt to improve, Shinsegae, one of the largest retailing company has introduced AI chatbots to better communicate with their customers.
Quick sum up
We have learned that South Korean e-commerce market is growing fast, and your business must answer to the rising expectations of the Korean customers. What do they expect:
- Fast and inexpensive delivery
- User-friendly mobile platforms
- High-quality customer service
- Trustworthiness as a priority
We hope our e-commerce South Korea research helps you improve your positioning in the local market.