Current e-commerce information about Korea
E-commerce status in Korea
Korea is home to 51.2 million people with a total GDP of 1.4 trillion USD and is ranked as the 14th richest country, it has the seventh largest e-commerce market in the world and the third largest in in Asia. (China $563 billion, U.S. $350 billion, U.K. $94 billion, Japan $79 billion, Germany $73 billion, France $42 billion, and South Korea $37 Billion). This is thanks in large part to the great high speed internet connection available in Korea which has some of the fastest Internet speeds in the world. E-commerce in Korea account for 10% of all retail sales and the number is growing every month as more and more customers become more trusting of internet transactions and delivery reliability.
Internet penetration in Korea
Internet penetration in South Korea is currently 89.3%, and should reach 91.6% by 2021. Smartphone penetration is a little less (80.6%), but is projected to grow to 85.4% in the next four years.
70% of online shoppers in South Korea shop online via desktop, a stark contrast to the amount of smartphone (25%) and tablet (2%) shoppers.
Preferred products categories
The largest e-commerce category in South Korea is travel-related products and services, then comes clothing and fashion, and then household products. This data comes from KOSTAT, a South Korean statistics and analysis service.
Preferred online payment methods
34% Korean shoppers use social media payment gateways when shopping online via mobile, and a further 29% prefer bank payment apps. Samsung Pay is also a popular online payment method in South Korea.
Top 5 e-commerce websites in Korea
Top 1. Gmarket
Gmarket is a Korean online auction and shopping mall website, where people from all around the world, not just in Korea, buy and sell goods and services. It was founded in 1999 by Young Bae Ku and was sold to eBay ten years later for $1.2 billion. The site is available in English, Korean, and Chinese and is known for being very easy to navigate and is known as a site where you can buy anything from protein powders to wedding dresses. You can find all kinds of items from rare to valuable. Think of Gmarket as a global yard sale/auction site. With that comes risk as there are many counterfeits and questionable listings which buyers must watch out for. Sellers usually don’t have to pay a delivery free for orders that happen within Korea. Gmarket also offers loyalty and discounting programs, called Gstamp and Smile Points, as well as monthly coupons for additional discounts. One unique discounting program is the daily drawings so customers can win more Gstamps and Smile Points. Customers can choose from a variety of payment methods from bank transfers to credit cards/prepaid cards.
Top 2. Coupang
Coupang is considered one of the fastest up growing e-commerce companies not only in Korea but in the world. They weren’t always an e-commerce company, in the early years the company started out by just offering daily deals on services and products but started to make partnerships to sell items on the site. Coupang reportedly generates roughly 70 percent of its sales through smartphones. Now this e-commerce site sells curated content that range from baby products to event tickets. The company is valued at over $5 billion and CEO Kim Bom has gone on record saying the company will spend over $1 billion in the next two years to boost their already impressive delivery service “RocketDelivery”, which is known for its same day delivery. It already has 20warehouses and plans to establish more, to make shipping even faster. Coupang is estimated to be valued at $5 billion. The site currently is only available in Korean but has a very easy to use app.
Top 3. 11st
11st was launched by SK planet to tap in to the growing e-commerce market in Korea. It started out in South Korea but has grown so much that it has expanded outside of Korea and into Asian countries like Turkey, Malaysia, and Indonesia. Customers can choose their preferred currency while shopping on the site. 11st offer clothing, jewelry, groceries, electronics, just to name a few. 11st also offer a points/mileage system where customers can use for discounts on their products. They offer international shipping as well as Paypal.
Top 4. Auction.co.kr
Auction Co. is an online E-Commerce auction company that was acquired by eBay in 2001. Auction.co.kr is more known as a price comparison site which makes it more than just an e-commerce destination for customers. They don’t have the sales or customers to compete with the top e-commerce players in Korea, however they are known for offering the best deals buy bringing together more than 3,000 e-commerce sites to compare prices. The cheapest are listed at the top and Auction gets a commission for every referral. This does not just meant the big e-commerce sites but also small online shops. Auction is driven by their heavy user generated content from product reviews to expert comments.
Top 5. WeMakePrice
WeMakePrice is a Korean e-commerce site specializing in daily deals. The site has faltered a bit over the years in their goal of being the first e-commerce site in Korea. Currently they are the firth-largest e-commerce site in Korea. They got sued by Coupang for what they called negative advertising tactics. Still WeMakePrice continues to get investments in hopes of expanding abroad. They are valued at around $2 Billion. WeMakePrice has a wide selection of products from clothes to beauty products to bottled water.
6 Tips for e-commerce in Korea
Tip 1. Ensure fast delivery times
According to a survey by the Korea Customs Service, long delivery times is a top concern except from large shipping costs of Korean consumers considering cross-border online purchases.
Social commerce provider Coupang was one of the first to offer fast delivery times, with its “Rocket Delivery” service, which guaranteed same-day/next-day delivery for many frequently ordered products. Soon after, many other major Korean open-market companies and online stores adopted same-day delivery. However, deputy purchasing agents and international online malls typically provide five to seven-day delivery service for cross-border online sales. Dropshippers should look for ways to provide a fast delivery service to Korean customers.
Tip 2. Accept Korean credit card payment
Credit cards are the most commonly used payment method in Korea, with 74 percent of online transactions being handled by credit card compared to the global average rate of 53 percent. The majority of Korean credit cards are connected to the international payment processing networks of Visa, MasterCard and American Express.
The fact that Korean customers prefer to pay by credit card is advantageous for Dropshippers as it enables a simpler and more transparent payment process. Dropshippers should seek to accept credit cards issued in Korea.
Tip 3. Develop a website tailored to Korean customers’ expectations
To succeed in the competitive Korean online retail market, Dropshippers must sell on a platform suitable for the local market. Korean customers prefer to buy from sites that are in Korean language and have a web-interface designed for the Korean market.
Tip 4. Provide responsive customer service
Korean consumers have high expectations when it comes to customer service and after-sales service. Dropshippers are advised to work with a service provider that can manage total customer service or employ a Korean speaker who can provide prompt customer service.
Tip 5. Package your products properly
Products shipped should be meticulously packed to protect them from any damage, including cracking and leaking, the two most common complaints from Koreans who purchased products online. If the purchased product is damaged due to poor packing, Dropshippers is liable to compensate the customer for the price of the product. There may also be longer-term damage to the brand.
Tip 6. Identify the right partners based on strategies & needs
To overcome hurdles relating to cross-border online trade, exporters can utilize third-party logistics providers and partner with global/regional online marketplaces that can help with these challenges.