Ecommerce comprises roughly 10 percent of retail sales in the nation. Two dominant ecommerce websites in the country are marketplaces: Gmarket and 11street. A third big website, Coupang, established a market recently that currently has 25,000 sellers. Marketplaces, in other words, are popular in South Korea — such as in Japan, which I profiled last month in”Ecommerce in Japan: Marketplaces Dominate.”
Ecommerce Sales Booming
Ecommerce has grown significantly over the past few years in South Korea. Coupang is probably the fastest growing. The business is valued at $5 billion. It has raised $1.5 billion since its launch in 2010, which makes it the third most-funded startup, following Uber and Flipkart.
The greatest ecommerce class in South Korea is travel-related services and products, followed by clothes and style, and then household products. This is based on information from KOSTAT, a South Korean data and analysis support.
According to eMarketer, 2015 retail ecommerce sales in South Korea were approximately $37 billion, which makes it the seventh biggest in the world, behind China ($563 billion), U.S. ($350 billion), U.K. ($94 billion), Japan ($79 billion), Germany ($73 billion), and France ($42 billion).
Roughly 64 percent of South Korean consumers use their telephones to access the net. This has resulted in explosive growth for mobile commerce earnings, which are anticipated to be approximately $15 billion in 2016. U.S. 2016 mobile commerce sales will be approximately $142 billion, according to Forrester. Coupang allegedly generates roughly 70 percent of its sales through smartphones. All significant ecommerce businesses in South Korea have apps and mobile sites.
U.S.-type Website Designs
Ecommerce websites in Korea are somewhat less cluttered, with less information density. Coupang is a good example of this.
Ecommerce website designs in Korea are similar to the U.S. with less information density. This differs from Japanese sites, where data density is preferred. Korean websites also cater to global clients and hence support many languages oftentimes. Gmarket, for example, supports English and Chinese, along with Korean.
Heavy Use of Benefits and Discounting
Ecommerce websites in South Korea use discounting to drive traffic and gain market share. Coupang, by way of instance, asserts its diaper prices are the cheapest in the nation; Coupang is subsidizing the price by investing advertising dollars. Gmarket offers discounts of 50 percent for first-time buyers.
Gmarket also provides loyalty and discounting programs, known as Gstamp and Smile Points, to help retain present customers. Gmarket has monthly coupons for additional discounts in addition to the already discounted prices. Additionally, Gmarket delivers a daily drawing to let customers win more Gstamps and Smile Points. This heavy discounting is probably not sustainable in the long run.
Gmarket’s daily drawing allows clients win more Gstamps and Smile Points.
Payment Methods Include Local Credit Cards
South Korean consumers heavily utilize credit cards for ecommerce. Typically, South Korean families have approximately four cards. In addition to Visa and MasterCard, you will find South Korean card manufacturers, such as KB Kookmin, Shinhan, Samsung, and Hyundai.
Money transfers, such as wire transfers and electronic fund transfers, are another common type of ecommerce payments. Electronic wallets are used frequently for mobile commerce, as customers often link the wallet for their credit card or bank accounts.
Much like Japan, South Korea’s high population density and a small size mean quicker deliveries. Coupang has assembled its own delivery system, RocketDelivery, that’s well known for same day shipping. It has 14 warehouses and plans to grow to 21 from 2017, to make shipping much quicker.
Gmarket also delivers fast. But being a market, it gets the sellers to ship ordered products to Gmarket’s warehouse. Then it consolidates products from various vendors that are part of the same order into one box and ships it to the clients. This procedure requires a few days, but the clients prefer it. Rather than receiving several boxes out of the sellers that might not be packed appropriately, customers receive only 1 box from Gmarket.
Customer Support Is a Differentiator
Traditional brick-and-mortar retail companies in South Korea aren’t known for customer service. Ecommerce websites have taken advantage of this to grow their business. Coupang, by way of instance, set up its business from the beginning around customer service. Its delivery service staff functions as brand ambassadors by handing out product samples and handwritten thank you notes. This is also one of the big causes of Coupang’s huge increase in the South Korean market, though its 2010 launch was considerably later than Gmarket (2000) and 11street (2008).
Getting a Seller in South Korea
Ecommerce marketplaces in South Korea typically require similar information from vendors. Including: certificate of company registration in South Korea, a bank statement, a passport copy of this representative shown on the company registration, and extra seller details.
South Korea is a large, competitive ecommerce marketplace. Multiple, competing sellers often sell the exact products. To lure clients, these sellers frequently greatly discount the item price to capture market share. Some even sell products in a loss for this reason. Ecommerce retailers which are contemplating selling in South Korean should carefully evaluate if their product is unique enough, versus present offerings.