South Korea is one of the most advanced online retail market as of today. Reliable internet and extensive penetration have enabled the success of online businesses in the country. According to a report, South Korea ranks third worldwide in online retail sales figures, and there is a projection that South Korea will grow into a $33 billion E-Commerce market by 2021.
The most popular online shopping sectors are household items, food, online travel and reservation services, home electronics and appliances, and fashion and apparel.
E-commerce startups serving a variety of things online are thriving in the country. Five out of the total of 10 unicorn startups in the country are into E-commerce. Korean startup Coupang holds the top spot in online shopping, followed by others like eBay Korea, Gmarket, etc. Startup platforms like Woowa Brothers, Wemakeprice are also doing quite well.
So why is South Korea such a hotbed for E-commerce businesses and why the E-commerce startups are growing exponentially?
Koreatechdesk.com puts the top three reasons for the success of E-commerce in South Korea.
1) Reliable Internet & Digital penetration:
South Korea is a well-connected country, with 95% of the LTE coverage. The country has the fastest average internet connection and the greatest number of broadband services per capita in the world. South Korea also boasts the world’s highest average internet connection speed, at 24.6 Mbps.3 Most Korean households have access to the internet, and there is an established digital infrastructure as well. Digital transactions are easily done through various payment services like Toss and Kakao Pay. Strong technological and mobile adoption enables the success of the e-commerce market. The M-Commerce market is also favored, especially among the youth, who buy everything using mobile applications. More than 50% of online retail sales in South Korea are done through mobile devices, according to a statistics report.
2) High population density concentration in cities
South Korea’s population density is very high and concentrated in large cities. The population density in the country is about 517 people per square km. The population is concentrated in large cities, and big towns mean that it is quite easy logistics wise for E-commerce companies to operate. It is easier for online shopping companies to organize deliveries, rent out warehouses, find staff for delivery, etc. Some e-commerce companies in the country offer over-night deliveries to customers, which means order at night before 11 pm and get goods delivered at 7 am. Coupang’s Rocket Delivery is one of the top dawn delivery services in the country.
3) Consumer shopping habits
Korean consumers are quite technology-savvy, and with the best internet connection in the world, they have fast access to online shopping sites. South Korea ranked only second to Iceland in a 2017 ICT index report (Information and Communication Technology). Consumers have access to accessible interfaces, convenient online payment transactions, and quick deliveries. Most of the South Korean households are either single-person or nuclear families, where everyone has a job or other commitments like schools. So shopping online is quite convenient for most homes in the country over offline shopping. Interestingly, Korea’s older consumers are also active in online shopping when compared to 60 years, plus the population of other countries. The mobile payment applications make it easier to do transactions, and thus online shopping is a preferred mode for many Koreans.
